Measurements and data can’t eliminate uncertainty for farmers

Farmers farm in situations of great uncertainty.

There are many risks.

Those two things aren’t the same.

That might be why much advice coming from economists and other experts often faces resistance from farmers.

“They (economists) rarely talk about uncertainty. They talk about risk… as though you could calculate it. But in many cases you can’t calculate what the risk is,” said Robert Skidelsky, a noted British economist, in an interview on Bloomberg’s Odd Lots podcast.

“Economics is responsible for misleading people about the calculability of future events. It’s an absolutely huge weakness.”

It’s an interesting concept and I suspect it’s behind all sorts of human behaviour and human outcomes, including that of farmers. We face both risks and uncertainty and have to handle the two differently.

Risks can be independently managed, and that’s why so many of us focus on managing those risks.

Price risk? There are tools for that.

Production risk? We all know about crop insurance.

All sorts of specific risks have tools that allow somebody to manage them. There’s life insurance, disability insurance, travel insurance, auto insurance — all sorts of insurance.

These are all great tools that allow us to manage specific risks. They help us to deal with things that we can grasp and perceive.

A few years ago, I remember lots of people uttering the phrase “If you can’t measure it, you can’t manage it.” It was a big thing in North American management circles, as corporate managers tried to find ways to manage aspects of company operations that were hard to quantify.

But the risk of that mindset is that it might lead people to ignore things that can’t be measured. If you can’t break something out, weigh and assess it, perhaps you just move on to something that’s easier to deal with.

Farmers farm in situations of comprehensive uncertainty, with far more wild cards being dealt than almost any other business or industry faces.

There are lots of specific risks and experts in many fields have done excellent and invaluable work in developing tools, ways and methods of managing and mitigating those risks.

But farmers live in a holistic reality and beyond the mere pile of specific risks they know they face, they also know that their future contains unique uncertainty.

I think that’s the reality Skidelsky was thinking of when he spoke about risk versus uncertainty, and the mistaken certainty many economists cling to.

“They have always thought of the future as being in some sense calculable,” he said.

“We pretend we have probabilities of things happening.”

Without that certainty, farmers will always be cautious about the future.

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