Nature's Evil

Petrofarming uses two methods of oil conversion, physical and financial. Fertilisers are made from natural gas. Machinery runs on oil products. Together, they have substantially increased agricultural productivity. At the beginning of the nineteenth century in England, it took one calorie of energy to produce a dozen food calories. At the beginning of the twenty-first century, for every food calorie produced, two fuel calories were expended. But the financial conversion is happening on an even larger scale. Using agricultural subsidies, nations of the northern hemisphere redistribute capital between industry and agriculture, between the south and the north and, ultimately, between oil and food. Agricultural subsidy is one of the leading budget expenditures of individual countries and also of the EU. On top of that, various member countries subsidise the purchase price of grain and other staples. All this aid comes to over €100 billion. Other developed countries and China also spend enormous sums, comparable to their defence budgets, on agricultural subsidies. In every country, a big part of this financial flow comes from taxes on oil companies, fuel stations and car drivers, as well as from value-added tax on energy-intensive goods and services. Altogether, this is a much larger, and less clearly defined, area of taxation than would be the case with a straightforward emissions tax. In the current price system, grain and food products are globally underpriced, while oil and fuel products are globally overpriced. The explanation for this disbalance is the ability of the owners of topical resources, such as oil, to dictate monopolist or cartel prices on their production, together with the competition between dispersed food producers, who set their prices much closer to production costs. Land, grain and related products, such as meat, are some of the most widespread of natural resources. There is fierce competition in this diffused market, the opportunities for monopolies are minimal and the prices for these products are close to market prices. Unable to correct such distortions by market mechanisms, the states redistribute the revenue from the monopoly sectors to the competitive markets – from oil to food.

Malthus wrote that the exchange between town and country was the largest market in history as it was known then. Now this exchange has become the source of the largest distortions in the market. With all the new chemical, genetic and financial technologies, land, labour and even capital have ceased to be limiting factors of production. The limits are set by methane and carbon emissions; global agriculture makes a massive contribution to them – up to a quarter, globally. This figure exceeds the carbon emissions from transportation or any single industry. Still another factor is agriculture’s role in the deforestation of the planet, which also contributes to global warming: fields and pastures produce less oxygen than forests and capture less carbon. Carbon emissions echo the classical ‘tragedy of the commons’. No individual looks after what is commonly owned, and we still regard the earth’s atmosphere in the way that Stone Age man regarded land – as an infinite resource. But the solution found then – the privatisation of land, starting with all the best bits – won’t work for the atmosphere.

Much has changed since the ‘sect’ of physiocrats defined the fashions in Versailles. President Macron’s project of raising ‘eco-taxes’ in 2018 led to mass protests, and the government was forced to abandon this measure. The problem was a lack of trust. If the revenue collected from the new tax had honestly been spent on environmental projects, the result might have been different. The agricultural sector of the world economy has received surprisingly little critical attention – less than defence or oil, which are similar in size. Globally, subsidies go mainly to the large-scale and energy-intensive staples – wheat, soya beans, cotton; in Europe, they also support small-scale and traditional forms of agriculture. Everywhere, disproportionate amounts of subsidy go to cattle farming; in the USA the proportion is estimated at 63 per cent. The official goal of the gigantic Chinese subsidies is to shift the balance of agricultural production from grain to soya, which is used mainly as cattle fodder. The benefits of subsidies are not at all clear; the harm they cause is all too obvious. They distort prices, increase emissions, and exacerbate all kinds of inequality. By artificially lowering the price of food, subsidies deprive poor countries of their revenue. They support big farms and impede urbanisation, but their function is not to make farmers more equal. Subsidies selectively encourage those sectors of agriculture which are the most harmful for the environment, especially cattle farming. Repeating the failure of the Soviet Union (see chapter 2 ), this is the food programme on a world scale.

Destroying society