Monday, June 3, 2013

Peak Oil and Mechanized Agriculture


When will mechanical agriculture be abandoned in favor of manual labor? One way of approaching an answer is strictly economic: the point will be reached when it costs farmers more money to use machinery than to do the work by hand. In an early study of Mexican labor mentioned by David Pimentel (1984), "a total of 1,144 hours of labor was required to raise a hectare of corn." Pimentel then compares that labor with the mechanized corn production in the United States, telling us that in the US "600 liters [3.75 barrels] of oil equivalents [for fuel, fertilizer, and pesticides] are required to cultivate 1 ha of corn." At a 2008 price of $100/barrel (to pick a year with a nice round number), the production of that hectare of corn would therefore cost $375. Yet the yield per hectare with mechanized agriculture is three times greater than with manual labor, so the same actual amount of corn that is grown with manual labor can be be produced by machinery for $125. At the moment, it cannot be said that corn is an expensive crop.

To discover whether mechanization is cost-effective, we must also consider the hourly wage. If the laborer is self-employed, however, the figure for hourly wage seems purely imaginary: If costs are rising, for example, can a laborer not simply pay himself less? Yes, but only to a certain degree. The laborer’s wage is often as little as it takes for staying alive, and anything less than that subsistence wage would make farming impossible.

The rise in the price of fuel, compared to the hourly wage of manual labor, then, largely determines the cut-off point for mechanized labor. When a farmer pays himself a certain amount for his work on that hectare, but the price of fuel is still rising, eventually it is no longer reasonable for him to use machinery requiring fossil fuels.

Two other factors must be included if we are to compare manual labor with mechanization. Capital costs are higher with mechanization: a tractor must be paid for, there are repairs to consider, and eventually the tractor must be replaced. Let us assume, however, that the laborer is working with a minimum of equipment. Secondly, in spite of what was said above about subsistence wages, farming income is higher in some countries than in others, and the same can be said of fuel costs. Farmers in Mexico, with high fuel costs and low wages, might be inclined to abandon mechanization sooner than farmers in the United States.

Food can also be produced with the labor of horses or oxen, and in fact many hours of human labor can thereby by saved. Even if animals are fed only on forage, however, a good deal of land is needed for that purpose. It is also questionable whether large numbers of horses or oxen could be bred and distributed in the next few decades.

What will be the price of oil in a few years' time? For most of the last few decades, oil prices increased only at the same rate as the median income, with the exception of some small deviations during periods of warfare. As noted, the price of a barrel reached about $100 in 2008, and since about 2002 there has been a rise of about 10 percent annually. With such a growth trend, a hundred years from now a barrel of oil will cost more than a million dollars, although number-juggling of that sort becomes rather ridiculous.

The other way of estimating a cut-off date for oil-based agriculture is to look at predictions of the decline in global oil production. According to the most estimates, the world's proved reserves are only a little over a trillion barrels. A trillion barrels is not enough to stretch for more than another few decades. A lengthy continuation of a 10 percent annual increase in the cost of oil may seem an impossibility, since it is more severe than the likely downward curve for global oil production: a decline from 30 billion barrels in the year 2010 (perhaps the peak of production) to 15 billion barrels in 2030 would be an average annual decrease in production of 3 percent. Neither the curve of oil prices nor that of production, though, can be considered good news for anyone who still has faith in a civilization based on fossil fuels.

It is not only oil prices and estimated reserves that have, to some degree, a chronological relationship. It is surely not merely coincidental that in the last few years there has been so much government support for ethanol and other bio-fuels, in spite of the economic and ecological absurdity of such forms of "alternative energy." The general attitude seems to be that anything is better than facing reality.


Reference:

Pimentel, D. (1984). Energy flows in agricultural and natural ecosystems. CIHEAM (International Centre for Advanced Mediterranean Agronomic Studies). Retrieved from http://www.ressources.ciheam.org/om/pdf/s07/c10841.pdf


Peter Goodchild

Author of Tumbling Tide: Population, Petroleum, and Systemic Collapse (London, Ontario: Insomniac Press, 2014)

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