The real benefits of organic produce

The FSA reckon that organic food is no better nutritionally than conventional food products. Personally, I reckon they’re probably right – in fact conventional food may actually contain higher amounts of essential carcinogens from all those wonderful chemical inputs that get sprayed onto the crops. We all need our daily dose of cancer, after all.

To focus on the health benefits though does kind of miss the point though. There are far more compelling reasons to eat organic food than a slightly reduced risk of bowel cancer (though obviously that would be nice). The advantages of organic farming lie elsewhere - organic farming is far better for the environment, while organic farmers have a far more secure livelihood in times of economic depression.

Commercial farming is one of the leading causes of soil, air and water pollution. A portion of this pollution is formed from animal waste, which is common to both organic and industrial farming methods. But another major component is that which results from chemical pesticides, fertilisers, hormones and other industrial treatments.

Organic farming is not entirely free of these treatments (though biodynamic farming, and extreme form of organic agriculture, is) but the exposure of the environment to potentially harmful chemicals is much reduced.

For farmers an even more convincing argument is that organic farming can make sound economic sense. Organic farmers are better protected against fluctuations in the market than those which rely on chemical inputs precisely because they don’t have to spend money on those products.

Conventional farmers are slaves to chemical inputs; they need to make a certain amount every year just so they can afford to buy fertiliser and pesticides for the one following. They often have to take corporate contracts as a measure of security, which places power firmly in the arms of supermarkets and international food production companies rather than the farmer himself.

Organic farmers, while not entirely self-sufficient, have much reduced costs. This means they are better able to ride out fluctuations in the market and don’t need to put their future in the hands of corporate buyers who in some cases can use their purchasing power to force prices artificially low.

The life of an organic farmer is hardly idyllic and there are a number of risks involved as well – not least the potentially increased risk of disease among cattle. But the global recession has meant that an increasing number of farmers have started to see the attraction of going organic. In France last year, the number of organic farmers grew by 20%, compared to 2.5% in each of the previous 8 years. The reason? They’re sick of getting 20p for a gallon of milk that costs 40p to produce.

The French government have been helping them make the switch as well, handing out tax credits as a carrot to encourage the change. French farmers are voting with their feet and there appears to be the makings of a new organic revolution there.

So who cares whether organic food is actually better for you? You should buy it anyway. Because buying organic food helps to protect both the environment and give some power back to the farmers – the latter of which has to be a good thing, given the mess that the money men and politicians have made of things in recent years.

Is a Green Investment Bank Really a Good Idea?

Alastair Darling has announced the formation of a new green investment bank in the latest budget. Great, that’s just what we need – more middle men lining their pockets at the expense of the wider economy. Seriously, it may sound like a good idea, but I'm not so sure that it is. Wouldn’t the money be better spent elsewhere? Do we really want to be injecting more cash into an industry that’s all but brought the world to its knees over the last two years?

Of course, this could all be a publicity stunt. The bank is being formed from £1 billion of government money and £1 billion of private investment; that make sound like a lot but it’s a pittance compared to how much is needed. Some estimates are that the UK needs around £500 billion investment in green infrastructure over the next ten years. My inner cynic, who may be slightly less inner than I am prepared to admit, suggests that this figure is likely to be conservative as well. Government projects have a long and glorious history of being delivered over-budget so we can probably slap a few hundred billion on that figure right now.

Regardless of budgeting issues though, the most pressing question is this – how would a green investment bank actually work?

As far as I understand it (and correct me if I’m wrong) the purpose of any investment bank is to make money through investment. So a green investment bank would ultimately be looking to make money from green projects if it wasn’t going to continued being subsidized by the government. But if there was a lot of money in green projects then we probably wouldn’t have to have a green investment bank because the industry would have taken off years ago.

Many green projects do undoubtedly turn a profit in the long run, even on a small scale. If you add solar power to your home it might cost you a few thousand pounds but you’ll have made that money back within fifteen years in most cases.

However, one of the main reasons that the UK lags behind its European counterparts on conversion to a green economy is the lack of a quick and secure return on time and money spent on green projects. The Anglo-American business model provides fewer incentives for businesses to get involves; neither is a fifteen year return on £2 billion going to make a dent in the UK’s investment requirements.

Plus, remember that you’ve got to pay the damn bankers as well – the same people who are constantly in the news trying to justify their sixteen figure bonuses as ‘necessary’ to attract ‘talent’. Assuming that we want ‘talent’ for this new bank are we going to have to expend half the invested capital just keeping the middle men happy?

A large factor affecting the costs of green development is the lack of competition within the sector. Take Centrica, for example. Currently the company operates four offshore wind farms and they’re one of the world leaders in wind energy production. But in 2008 they announced that the prospects of turning a profit from wind farms were becoming “marginal” at best. Shortly before the announcement, Shell had pulled out of a joint project to create what would have been the largest wind farm in the world - after the estimated cost of the project had doubled from £1 billion to £2 billion in the five years since its inception.

At the time there was a general feeling that the increase in costs was largely down to a lack of bids for the project – only one company had submitted a tender to produce the turbines themselves and they could pretty much name their price.

And it is this which is the crux of the matter. The UK is a service economy. We’ve struggled for years to get away from our manufacturing roots and in the process we’ve hamstrung ourselves. Over the last twenty years our whole economic model has been tied to a financial sector that has recently been sinking faster than the Titanic.

We don't have the manufacturing resources to create the necessary conglomerates and economies of scale that would increase efficiency, increase competition and ultimately bring down the cost of 'going green'. If we did then we'd find it much, much easier to attract private sector investment.

So rather than injecting yet another £2 billion into yet another bank, wouldn’t it be better to spend the money on re-establishing our manufacturing base? Of course, this might happen anyway - if the bank is run sensibly it will put money into smaller engineering start-ups than pissing it into large projects with spiralling budgets. But if that is the ultimate goal, why do we need the bank? Why not inject it directly into the industry without lining the pockets of some overpaid fat cat middle men?