Seed money

25 Oct 2013 By Jeffrey Goldfarb

Warren Buffett has made billions of dollars investing and his farmer son is helping give them away. In the new book “Forty Chances,” Howard Graham Buffett chronicles his efforts with his own son Howard Warren to combat the mind-boggling inefficiencies and bad philanthropic habits that get in the way of ending world hunger. It’s hard at times to relate to the plight, but reassuring to know the Buffett family is on the case.

The conceit of the book enlists a classic bit of the folksy Buffett appeal. At a weekend winter “Planter’s School” event, a speaker imparts the idea that while the task of producing food can feel like a perpetual cycle of seeding and harvesting, each farmer really only has about 40 growing seasons to maximize a crop. The lecture hit home for Buffett (the surname, unless otherwise specified, refers throughout to the Oracle of Omaha’s son, Howard G.), who realized the message extended beyond farming. He refocused his charitable foundation, created in 2006 with funds donated by his parents, on finding ways to feed hungry people.

The organization has given itself 40 chances. It intends to disperse its $3 billion and, as Buffett puts it, go out of business by 2045. The book, meanwhile, is mostly a series of 40 vignettes about the struggles and triumphs of those in need of aid and others trying to provide it.

Buffett finds himself in a unique position to effect change. Not only does he possess the necessary financial resources, but he has also had the benefit of working the earth and growing up under the tutelage of an accomplished capitalist. He subtly and perhaps even unintentionally alludes to the point when he explains: “I have rarely seen a farmer who is a great economist, an outstanding academic, or a successful politician, but the inverse is also true.”

To his great credit, Buffett doesn’t just sit in an office in Decatur, Illinois, reading agricultural journals and signing checks. He spends a lot of time muddying his boots in impoverished and dangerous areas like South Sudan and Sierra Leone, engaging with children, farmers and warlords. Buffett, like his father, has a knack for telling a story simply. Some of them are heartbreaking, others inspiring. Many are immensely frustrating.

One of the lasting impressions of “Forty Chances” is that agriculture is among the most inefficient markets in the world. Buffett is disarmingly blunt about the shortcomings. He criticizes everything from outdated and poorly designed government policies, including certain U.S. subsidies, to technical failings like the global habits of using too much fertilizer, excessive tilling and the lack of new seeds available to African farmers who grow primarily to feed themselves.

There are the problems of “philanthropic colonialism” and the head-scratching practice by some non-governmental organizations of selling donated food – and thus distorting prices – to raise funds for other projects.

Having grown up on the oddly contrarian idea of investing for the long term, Buffett and his son find that problematic short-term thinking isn’t confined to the for-profit world. NGOs are in the habit of giving away goods, ignoring or overlooking the unintended consequence that it creates a pattern of expectation among the recipients and prevents the development of local markets.

Buffett cites the work of Zambian economist Dambisa Moyo, who in 2009 said the developed world sent some $1 trillion in aid to Africa over the course of a half century only to have the continent’s per capita income decline from where it had been in the 1970s.

Buffett’s concerns about multinational NGOs are palpable. They can’t seem to break their bad cycles because donors want to see results before they commit more funds. Such groups also have problems of their own making. “Their size and bureaucracy stifle their ability to solve problems on a large scale where it seems they should be able to operate,” Buffett writes. “They focus on projects and activities, not enough on outcomes, and not enough on learning to work together instead of competing for the same dollars in the same way.”

There are plenty of successes from which to learn, too, including in governments that have a monopoly on protecting land rights and enforcing contracts. For example, Buffett extols the work of Brazilian officials, whose agricultural policies and research since the 1970s have sharply reduced the country’s proportion of undernourished citizens and the prevalence of underweight children. He sees it as a possible model for Africa, which faces similar problems of tired soil and growing populations.

Of course, he is also still a Buffett, and knows the importance of aligning interests. Finding ways to ensure that farmers own the land on which they work is an important aim.

The younger Buffett, meanwhile, sees some hope in technology. In one of the chapters he contributes, Howard W. Buffett focuses on the “farmer of the future.” Clay Mitchell, an Iowa farmer who splits his time in San Francisco, pioneered the use of GPS-steered farm equipment in the Midwest and hand-tagged bar codes on corn plants to help measure stalk thickness and water penetration in an effort to improve productivity and to help the United States keep up with cutting-edge practices being advanced in other countries.

Ultimately, “Forty Chances” educates and enlightens without coming off as a polemic. That also means, however, that it doesn’t necessarily function as the call to action Buffett intends. There is an accompanying website with ways for readers to help, but the huge financial sums and structural challenges involved also feel daunting. It’s at least comforting to know that three generations of Buffett aren’t intimidated.


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