Transaction costs and farming

Many people stress about the ‘cost of living’ but the ‘cost’ of living is not the only thing that makes demands on one.  Institutional economics has developed the concept of ‘transaction costs’. These are the costs, financial but also in terms of time and stress, that occur when trying to find a new ‘supplier’.  When I go to the ‘market’ to buy tomatoes I have relatively straightforward choices between variety, quality, origin and price.  But, when I want to find a dentist, mechanic or accountant, things become more complicated.  The same is true if I want to buy, say, bottling machinery that will preserve those tomatoes.  

This has huge implications whenever people talk about, or conceive of, ‘the market’.  It means ‘trusted trading partner’ becomes a criterion that is much more important than ‘best deal on the street.’      I have been working with some clients of my business for almost fifteen years, since I first started it.  I have been using the services of some key suppliers for almost as long.  These are smooth relationships, far removed from the cut and thrust of spot markets.   I have good relations with these people, all tried and trusted business partners. 

When moving home (and especially country) developing these relationships anew can be one of the hardest things.  This was especially noticeable when I moved from Wageningen to Brussels five years ago.  Most of the contacts I made for things like a computer support, flat sharers etc., were achieved via the local Couchsurfing  group. Trying to find a mechanic was hell (no-one in the Brussels Couchsurfing group had a car).  The dentist, doctor and notary were found through lists of British-speaking professionals on the UK Consulate’s web-site.  But that was pretty much a stab in the dark. I mostly went for those that were easily accessible by public transport.   

Now I am going through the same process in Hendaye.  The mechanic, handyman and translator are already in place (though in some cases with reservations).   The search is on for a doctor and wood-supplier.  It’s much easier in a small town. You ask your acquaintances if they can recommend a (fill in gap here).  Sometimes it will just be a friend of theirs, others someone who does give good service.

But I am trying to take my search a bit deeper here.  I have recently joined a Jardin Collectif, which I blogged about a few weeks ago.  Jardins Collectifs are a form of community supported agriculture (CSA) help move farmers, growers and consumers move away from the brutality of spot markets and into a mode of exchange that is more trust-based, offers them more continuity and helps to balance the grower’s cash flow across the year.  

If you don’t already belong to one try researching what is available in your neighbourhood: a box scheme for fruit and veg (preferably from a local grower) or a meat-bag scheme.  When living In Wageningen I even belonged to a group that had keys that gave us access to a trailer full of dairy and meat products and an honesty box.  (I don’t think that model would work in a larger city such as Brussels!!).  Let’s help farmers and growers move away from the insecurity associated with reliance on spot markets and/or contracts with multi-national retailers.

Digital Nomad

I'm a happy bunny. In the last three days I have received three contract offers, one from my alma mater,  from where I received my PhD more than fifteen years ago one from an ex-colleague from Wageningen who has since relocated to Vigo and one from a new Chinese client (again in the world of rural development) who somehow got my name from someone in my network there. I was experiencing some anxiety that my move to Hendaye from Brussels ('because I like the light here') was stetching the invisible threads that sustain me a bit thin. I hadn't had many new contracts (not negotiated before I 'left' Brussels) arrive in this summer. It's good to be reassured that they are both durable and that they span half the globe!    

It seems I am not alone in loving the light here, the sense of energy that being between the mountains and the sea and at a cross over point between three cultures.  I've met four people in the past week, all at different locations/events, who have moved here in the past six months.  


Down side is I might be too busy to go to the beach next month.

Say it in Broken English

A sign seen at a bird 'sanctuary' in Urdax yesterday.  Check out how the English translation mutated!

But it has to be said that it's not such a spectacular faux-pas as this one (also from Spain) reported in the Guardian today

'Turn the lights out when you leave'

I had a whole working day to spend in Copenhagen after my weekend workshop (earlier flights were prohibitively expensive). And I ‘did’ Copenhagen (spent two months there attending a summer school) many years ago. Moreover I needed to work- there were some tight deadlines looming. So I dropped by the Hub to see if I could call a favour, based on my lapsed membership from Brussels (well Brussels Hub lapsed not my membership). It seemed a better option than trying to work out of a Starbucks or an internet café. I tried calling and got no answer, so tried turning up to see what would happened. Hub Copenhagen is located in one of the gorgeous multi-court yarded buildings that can be found everywhere in Copenhagen, painted in three different shades of ochre

I rang the bell. Nils answered: ‘We closed down on Friday. We’re emptying it out now and transferring the lease’. I explained my situation / predicament – and he immediately and generously offered me a room to work from where they wouldn’t be drilling or hammering– ‘but we don’t have an internet connection anymore’. Hub Copenhagen had sadly met the same issues that closed down Hub Brussels. Too high office rents!
So I found a quiet room, took a chair and desk and sat down in strange, but familiar, environment and pushed out four hours work for clients in Switzerland and Italy. And I marvelled at how international my life has become: a Brit living in Belgium with a Dutch-based business working today in Denmark for clients in other countries! Wow, nobody told me this was a career option!

So, sadly, I can claim to be the last person to have worked in Hub Copenhagen. And you know what? Nils and his colleague had to go out twenty minutes before I had finished and - never having met me before – just said ‘will you turn out the lights when you go’. I miss Hub Brussels so much!

Knowledge systems part 2

Back to work this week – although there is more admin to do than actual work. There’s one journal article to edit – about the factors that influence Ethiopian farmers decisions to adopt improved varieties of potatoes (IVs). The formal research system spends a lot of resources developing new higher yielding and disease resistant potatoes– but only 23% of farmers in the survey have adopted them – and only then on a small scale (on some 20% of the land that they use for growing potatoes). So why such a low adoption rate? The factors are complicated but they include the perception that the IVs require adopting more difficult management practices but mostly that there is more market demand for the local varieties, which have better stewing qualities. I have heard the same stories in relation to maize in east Africa – where farmers prefer the flavour texture and colour of traditional varieties. (With maize the issue of hybrid varieties – which need to be purchased every year - and the need to purchase more inputs also play a role).

So what are the implications of this? The Ethiopian Agricultural Knowledge and Innovation System (AKIS) is largely driven by the goals of food security – which means increasing yields and disease resistance. Farmers want a market for their produce – and the two sets of goals are not well-aligned. One solution to the problem suggested by the authors is to involve farmers more in the AKIS, making it more participatory than at present, so that farmers’ voices influence development objectives and research priorities. They also suggest that the AKIS makes more use of mobile phone technology (>66% of these farmers have a mobile!) to communicate their messages.

Working life

It’s been a long hard and cold winter. My Flemish friends noted that it snowed before St Niklaas (that’s 6th December to the rest of you). Since New Year the thermometer has barely risen above zero. The heating has stayed on at night (albeit low), otherwise it is uncomfortably cold in the morning. And the sun now rises before my alarm goes off, making it almost as redundant as the blinds in my bedroom are in keeping out light in the morning. It’s easier to get up in the light.

A few days ago I finished (editing) my first PhD thesis of the year. This one was an economics text about pineapple supply chains in Benin and how to improve them. It drew on institutional economics to describe the various supply chains and their modes of governance. These are quite familiar ideas to me – but worth explaining to many readers. In short different markets have different characteristics. There’s what people call the ‘spot market’ where things are bought and sold on the day’s trading price. Pretty much like your average fruit and veg. market (‘1 euro a kilo’) or the stock exchange. The two actually have a lot in common. They are both characterised by price volatility, opportunistic behaviour, a lack of trust between traders and what economists call ‘information asymmetry’ (one set of traders having more information than the others and using this to their – unfair- disadvantage).

On the other hand there are more structured markets, which are characterised by ‘asset specificity’. For example, you might be making a component that has very specific standards, performance etc. In this case you don’t sell on the spot market but enter into long term contracts, in which the product characteristics, pre and after sales service etc. are specified in detail. As a producer you may have to ‘tool-up’ your factory/farm and/or workforce to meet certain production criteria and need assurance that your investments will be worthwhile. Such relationships are characterised by long-term commitments and, as a general rule, the more specific the product/component – the stronger the relationship between buyer and seller. In the world of food, organic food or food with a regional origin, tends more towards the latter kind of market. For example organic coffee growers - in say Guatemala - will enter into agreements with buyers to grow in an organic manner. In return they will receive some training, perhaps some capital and a guaranteed minimum price. It’s a system that has a stabilising effect on the market and trading relations.

As individual consumers we are often bombarded with information that tries to make us ‘spot market’ buyers. In reality that is far from the case. We want a dentist, mechanic, accountant etc. whom we can trust. If they mess up, or their prices become exorbitant, then we will probably look elsewhere but the transaction (cost) of finding a new supplier – in terms of time of time if not money - can be daunting. So while we may look for the cheapest avocado we look for a reliable and trustworthy mechanic, etc.

Anyway, the point of this thesis was that pineapple growers in Benin could do much better if they were to enter into reciprocal agreements about quality, quantity, price etc. It would help them overcome the problems of not knowing who their buyers might be and also potentially offer them some access to up-front finance (pineapples have a long growing season and are capital intensive).

For my part I learned about the different characteristics of pineapple varieties, some of which (e.g. Cayenne Smooth) are in demand in northern markets, others more favoured in the countries where they are grown (e.g. Sugarloaf). To celebrate finishing this first thesis of the year I stopped by at Brussels biggest market to buy myself a pineapple. Despite the huge immigrant population in this part of town, I could only find Cayenne Smooths while my mouth was tingling remembering how good the green ones taste.

Counting my blessings

Sometimes of course, the glass seems half empty - but I do sometimes (though maybe not often enough) remember to be grateful for the incredible good fortune that has enabled me to support myself as a self-employed ex-pat for the past nine years.

I think that there will always be work enough for people like me while people continue to write sentences like this: "Sensibilized through recently published reports of all leading business consultancy firms such as McKinsey, Boston Consulting Group, Ernst & Young etc. many large scale global players such as Walmart, Nestlé, Unilever, Starbucks, Tesco, Carrefour, Rewe not only discovered that more and more consumers start to care about the environmental and social footprint of a product but realized that business as usual, conventional agricultural practices already on short-term lead to a severe soil and water scarcity and with it present a risk to resource and commodity security."

Its easy to pick the general picture but there are some many ideas in this one sentence that its like looking at a Picasso painting while under the influence of hallucingens. (I'm employing a theoretical metaphor here of course).

Taking care of business

I'm generally reluctant to blog about my business. Partly because I don't want to use my blog as a marketing platform. Partly because a lot of the editing work I do is pre-publication - and it would be indiscrete to talk about the contents of reports that have not yet been published. And, sometimes, it would be betraying client confidence to grumble about the quality of texts that I am asked to heal. Some of these texts could have been generated by the Po-Mo essay engine.

As an internet-based business my work can be quite anonymous. Often I never meet the people I am working for. The opportunity to meet clients is always welcome. This week a paper I had just edited about transparency in coal supply chains was the subject of a Political Cafe in Den Haag. A good opportunity to get out of Wageningen for an evening and to meet the faces behind the e-mails.



The paper was commissioned following the Dutch government's decision to allow the deregulated power sector to construct five new coal-fired power stations in the coming years. As the Netherlands doesn't have any working mines this will imply a massive increase in coal imports. (It also implies tying the country into a high level of fossil fuel dependency over the coming forty years - with implications for meeting targets for reducing greenhouse gas emissions). The main sources of coal for the Dutch energy sector are South Africa, Colombia and Indonesia; so Both ENDS commissioned civil society organisations (CSOs) in these countries to look at the environmental, social and human rights footprints of coal mining in these countries. The results were not pretty reading (the report is still in draft format - so i won't steal their thunder by giving anything away). The CSOs found a litany of environmental neglect, pollution, health problems and civil rights abuses (the latter two among both the workforce and surrounding communities). This is perhaps not much of a surprise - any country with a coal mining industry has seen these issues played out; establishing worker's rights, health and safety regulations and pollution controls. In many ways these have been defining moments countries' political histories. Think back to Aberfan (South Wales) or the Ludlow Massacre in Colorado.

These days (with the exception of Poland) hardly any coal is mined in the EU. Instead we rely on supplies from distant countries. And this means the problems become more distant. While there is some level of awareness and concern about the exploitation in plantation agriculture and the clothing industry the social conditions and environmental effects of extractive industries(which extend far beyond coal) often remain forgotten - possibly because these are 'hidden commodities' that go into power stations, mobile phones or whatever: that we as consumers don't purchase directly.

One of the main discussion points at the meeting was the extent to which Dutch electricity companies are meeting their (voluntary) requirements on transparency and corporate social responsibility - holding their suppliers responsible for meeting basic environmental, health and safety and human rights standards. The ensuing discussion revealed a clear lack of traceability along the supply chain - with buyers not able to trace back coal shipments to their original source. The industry representative argued that this was because the complex nature of coal trading. The (largely NGO type) audience felt it reflected a lack of will among companies to follow their supply chains back to source.

This then led to a discussion about where responsibility lies in a system of multi-level governance. Does it lie with with private companies (who have made individual commitments to corporate responsibility - which may or may not be so much greenwash)? Does it lie with the industry as whole - who can set down benchmark standards. Does it lie with government - who can make companies legally responsible for the actions of their suppliers (especially those that they have a large financial stake in)? Or, in an increasingly Europeanised energy market does t lie with the EU. These issues won't be resolved by one meeting but it was an interesting and topical can of worms to open.

Rattling my cage.

Who's been rattling my cage? That's what I want to know!
The last few weeks have been full of ups and downs. In November I was promised a big contract for the coming year - payable in advance (this is not uncommon as projects sometimes have budget deadlines which expire before all the reports, articles and books have been written). I took this as a green light to go ahead with my calendar, made a final selection of images, commissioned the designer etc (see recent previous blogs). The first week in December I get an apologetic e mail saying that the project has no budget left and cannot follow this order through.

I spent a few hours doing sums and the figures looked red - blood red. I had a sleepless night and realised my only safe option was to pull out from printing and posting the calendar. Having already selected the artwork and commissioned the designer I've gone for a pdf version instead. You can download it from here. And here's a preview of the cover.
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In the two weeks following this decision I got an unexpected (and substantial) tax rebate and a stream of work offers that kept me busy for two weekends in a row and until 11 o clock on Tuesday night (to meet a last deadline) and have filled my work schedule for the first three weeks of January. The last quarter of the year is always the busiest for me. This year it waited until the 5th December to kick in and make the difference.

This storm of work was accompanied by having to get my car through its road test (not too painful) the cold snap (which completely drained its battery) and the fraught process of exchanging my UK driver's licence (with a recently expired photocard) for a Dutch one (that's a story for another time - but it had a happy ending).

So the calendar might have worked (financially) - but the ice was too thin. I learnt that while the calendar might be a good way of profiling my business it is also a bit of an indulgence - an expensive and time consuming one. I hope not too many readers or clients will be disappointed at receiving a pdf this year as opposed to a fat envelope and glossy calendar. And, if you are reading this and are on the calendar mailing list please let me know if you download the file. It will save me from sending a few emails in the coming days / weeks.

I don't think my artist has wholly forgiven me for downgrading the project at the last minute although have come to an 'understanding'. It will cheer her up if you visit her website - as she is hoping for lots more traffic this year though this collaboration.

Having had the earth move (not in the enjoyable sense) so much under my feet in the past few weeks I have hardly made any preparations for Christmas: time to head to the shops and put up the Christmas lights. Festive greetings to you all.

The Road to Copenhagen continued

Here's a link to the conference in the Hague about adaptation to global warming that I went to last month (the plenary session report is written by yours truly). At this moment I am hoping and praying that world leaders will come to realise that the common cause is greater than narrow sectarian interests (see Sarah's comment on my last blog entry for what could so easily be achieved).

Much of my work in the past year has been focused on climate change and, to a lesser extent policy and scientific input into Copenhagen, and so I feel a strong emotional attachment to the outcome of these negotiations. I don't think that a global conference has ever attracted so much attention and I also have an intuitive feeling that if these talks break down (and there is no commitment to producing a plan b) that the legitimacy of the whole system of global governance will lose its legitimacy. This could have major knock-on repercussions.

Today I read readers' comments on the Guardian about the negotiations and realised how few readers of this, one of the UK's most progressive mainstream newspaper, have any sense of optimism in the possibilities of global governance. So many readers believe that the world system can't be changed. I agree with them that there are huge inequalities in the world - but unless we are prepared to start addressing them through responding to this common threat, then we have no future on this planet. A society that does not believe that it has a future rapidly falls apart and, as the best placard I saw from Copenhagen says, there is no planet b.

Chance took me took another conference in the Hague this week, this time in the press rooms of the Dutch Government. This one was to celebrate 25 years of LEISA an organisation I have had the pleasure to work with, on and off, for more than seven years. LEISA has been documenting practices in Low External Input Sustainable Agriculture for twenty five years and advocating the use of approaches that are locally relevant (culturally, ecologically and economically). Such approaches are often more productive, and acceptable to small scale farmers, than high-tech intensive farming methods, which are often unaffordable to small farmers, harm ecosystem functioning and often fail under sub-optimal productive conditions. After the ballyhoo at Copenhagen about emission targets and adaptation funding dies down, the real work of adapting the world's food systems to the effects of climate change will begin. Hopefully there will be some money to help this process. Agriculture is responsible for something like 30% of global CO2 emissions (when one takes upstream and downstream effects, such as fertiliser production and distribution into account) and is the economic sector that will have to make the biggest changes to adapt to climate change. In Uganda the 'coffee line' (the altitude at which it is economically feasible / possible to grow coffee) is moving upwards in response to increased temperatures). In Nepal the same true is true for apple trees. Such changes will bring about local resource conflicts and endanger world food supplies (similar stories could be told about staples such as rice, maize and wheat- though these are more related to the lack of agricultural biodiversity bought about by reliance on just a few hybrid varieties). Our civilisation, and its values, rely on agriculture - to feed all the fashion and web designers, counsellors and even firemen and doctors who make up our societies today. LEISA and its followers are a good starting point for establishing a people and planet friendly agriculture.

Possibly more on this topic to follow but I have a pressing deadline ahead.

Backroom negotiations?

Much of the news about the forthcoming Copenhagen Conference on Climate Change is a sort of "will they won't they" discussion about setting clear and binding targets for reducing carbon emissions in the foreseeable future. By now the science is pretty indisputable - so the discussions will come down to political and distributive effects. Who is going to bear the brunt of the cuts? And can the political leaders sell these targets to their electorates (and industrial lobby groups)? But there are other issues apart from emission reductions that also need addressing.

Countless communities in the world are already suffering the effects of climate change. These vary considerably. In the Southern Andes glaciers are massively retreating, leading communities to abandon age old settlements as they have an inadequate supply of fresh water. In sub-Saharan African extreme weather conditions threaten the livelihoods of pastoralists and farmers alike. In Bangladesh millions face increased incidence and severity of flooding. Some countries may disappear completely - as dramatically highlighted in this unusual location for a government cabinet meeting.

Much of the work that I have done in the past year has focused on documenting these issues, the responses at ground level and the need for the policy community to support such iniatives. In Africa farmers face the challenge of adapting their cropping or grazing systems to more intense weather conditions and prolonged periods of drought. In South East Asia the draining of peatlands (often for commercial plantations) has the potential to release millions of tons of CO2 (although re-wetting abandoned peatland has the potential to absorb large amounts). Elsewhere in the world grassroots and participatory initiatives are developing new techniques for coping with the increasing risk of hazards becoming disasters and for adapting to climate change. While the scale of the problems is enormous the inventiveness of local communities and social entrepreneurs is inspiring. Over the last year I have been honoured to work with Christian Aid, Drynet , Wetlands International and Cordaid in documenting these experiences and initiatives.

Helping countries and communities to meet these challenges has to be a priority at Copenhagen too. This can take the form of technical assistance in becoming more prepared for disasters and need to include compensatory mechanisms for things like carbon sequestration. This will be the subject of a conference to be held in The Hague on Thursday (26th November) which will be organised by Hier a Dutch 'platform' organisation (we call them umbrella organisations in the UK - so it shows I am starting to go a little bit native). Its part of the build up for Copenhagen - to get climate change adapation in developing countries firmly on the agenda. Speakers will include the Dutch Development Cooperation Minister and the lead negotiator from the G77 (who is the Director General of the Maldivian Ministry of the Environment, Energy and Water).

One of the reports that I edited this summer was commissioned for this conference. I received a hard copy in the post today (it is always nice if a client remembers you that way). I mailed her back to say thanks and asked how the conference went and was told it was this week. "Would I like to come?" Well why not I'm not overworked at the moment, have never seen the Peace Palace and have promised myself that I should get out and spend more time networking with my clients. While I am replanning my Wednesday and Friday, so as to absorb a lost working day, I get a phone call from the organisers of the conference (fifteen minutes after having subscribed) asking if I would be a rapporteur for their morning session - as they need someone to write up the events for their publicity and lobbying activities. So I get a 'front row seat' for the build up to the Copenhagen Conference! Doubtless I will have more to say on this topic over the next few days. For the rest of the evening I think I will just marvel at how my networks link up.

In Broken English

A friend posted me this link on bad writing in the development world. Its a salutary lesson as I am doing some development writing myself. So it has incentivised me to substantially reduce the number of oblique and unnecessary words I employ (apart from when designed expressly to confound non native English readers of this blog).
The bad writing I see stems from four (often inter-related) causes
Non-native English speakers who transpose their grammar rules into English (as I do into Dutch of course).
People who don't know what they want to say so hide behind all sorts of hedging strategies
People who work in jargon-ridden fields who forget how to communicate these ideas to the rest of the world (see my last blog).
People who don't read anything (from outside their own specialist field)
I'll probably think of some more on the way home
My tip - if you want to learn how to write well read the Economist. I often disagree with the content but they do state their case clearly and succinctly.

Time to sign off. I have to think of three more ways to save the world before midnight.