The fabric of your life

Did you ever stop to think that the US dominates what should be one of the simplest industries?  We remain a world leader in agriculture, dominating an industry that should have been outsourced to lower cost countries years ago.

A great example is cotton.  I found myself yesterday listening to NPR and a story they are following about T-Shirts.  What was really interesting to me was the interview they conducted with an 83 year old cotton farmer in Lubbock Texas.  He runs a 300 acre cotton farm by himself.  The NPR interviewer noted that in most other cotton growing countries, it would take 10 workers to raise an acre of cotton.

He then said something so relevant to all US businesses that I almost ran a red light hurrying home to write it down.  He said "This is typical of the U.S. economy in the age of globalization. America does well in industries that advance quickly, in which research and development -- and not manual labor -- are the key factors of success. In this way, cotton is a bit like software and jet engines -- constantly innovating. The United States is losing out to developing countries in a different set of industries: the ones that don't change that quickly and succeed best with plenty of low-wage workers."

Agriculture wins in the US because of constant innovation, much like software and jet engines.  When was the last time you heard cotton, software and jet engines used together in a sentence that way?  Obviously the farmers in the US are as productive as they can be, squeezing a lot of value out of very few workers and making large investments in capital equipment and fertilizers.  But what keeps them on top is innovation.

As the article points out, much of that innovation comes from universities and agricultural extensions throughout the country.  We in the US provide tax incentives for agriculture and pour billions of dollars into research to improve crop yields, improve fertilizers and so forth.  And the US remains on the top of the food chain, so to speak.

What if constant, totally focused innovation became a mantra for every industry.  What if the government encouraged even more investments in innovation, especially focused on education and research?  If the farmers can differentiate through innovation, why not every business?

Comments

[Anders]

Jeff -- great blog. One question to ponder, though, is this: what does innovation look like for the US in the areas (i.e. low cost software development) that we are losing (as you point out)? It's interesting that software/technology on one hand is the core for why cotton can stay ahead (you use software or technology to innovate in a *different* industry), but in a way it has a challenging time innovating on itself, so it were. Anyway, interesting topic.

[Nick wilde]

Ummm, doesn't this have more to do with Government subsidies than innovation. There are even farmers out there that get paid more to not grow stuff than grow it. Not just in US but in just about all first world economies. That's what a lot of developing nations are struggling with. I'd hate for any developing industries to model themselves on a system that relies on government subsidisation. I'd much rather they modelled themselves on industries where it is truly innovation that keeps them at the top.

[Luca]

A couple of thoughts...

Nick is absolutely right. The reason why the U.S. produces cotton is subsidies. However, there are other commodities that would still be healthily produced in the U.S. even without subsidies (e.g. soybeans).

Innovation can be a fleeting concept. You come up with a software innovation today in the U.S., and tomorrow it will be used by Indian software developers. However sometimes you can build big, heavy, expensive "anchors" so that innovation does not float away. Few developing countries can afford the expensive GPS-controlled combines that U.S. farmers rely on.

Finally, there's one thing in U.S. agriculture that you can't outsource to developing countries: highly productive farmland connected by fully-depreciated transportation infrastructure to end markets willing to pay top dollar for your commodities.