This was once a healthy forest on this Guatemalan hillside, but it’s now permanently scarred from slash-and-burn clearing, vulnerable to severe soil erosion. Photo: Howard G. Buffett
“NOTHING TO FEAR”?
American farmland, on the other hand, has the potential to produce cereal grains without doing serious damage to the larger environment. We have the climate, geography, and technology to increase yields dramatically in our farming regions in a sustainable way. In my opinion, American farmers have neglected preserving the health of their soil for too long, but we know how to protect soil and increase yields, and that is what we must do. The most striking equation I came to understand during my research on biodiversity was that the US government was spending billions of dollars idling fertile cropland to support prices, while developing nations were subsidizing efforts to intensify production on fragile soils.
Another historical event had compounded the problem. Thanks in part to President Jimmy Carter pursuing a grain embargo against the Soviet Union in 1980, we had unintentionally created circumstances that took a heavy toll on rain forests. Brazil, Argentina, and other countries that previously had no ability to sell grains in volume into the worldwide market suddenly saw an opportunity when Carter decided to punish the Soviets for invading Afghanistan. They jumped at increasing production to sell into those markets and began converting forests at rapid rates.I Meanwhile, we were sitting on excess production capability on our fertile, healthy, productive cropland, and we had taken ourselves off the market.
I started checking in with some of the other sectors in agriculture: food processors, farm associations, and companies that provided various agricultural products. Although they were not anxious to get involved in the public debate, they were willing to remain neutral. What made sense to them was to increase yields and market penetration for American farmers on rich soils that, if farmed properly, did not damage anything else. If fragile ecosystems could be protected, so much the better.
I wrote an op-ed piece for the Washington Post headlined “Nothing to Fear from Biodiversity” in September 1994. I said we’d been foolish to fail to sign the convention and lose a seat at the table of world leaders discussing this critical issue. “If the world’s food supply is going to keep pace with population growth, the emphasis must shift to producing more on fertile, well-managed soils and less on fragile acres,” I wrote. I then went into some detail about different contributions that plants from abroad had made to the health of US agriculture. My fundamental argument was that because twenty species made up 90 percent of the world’s diet, it was essential to maintain diversity.
Dwayne liked the article. Not long after, he walked back into my office and said, “The US Senate committee wants you to come testify on biodiversity.” I said, “You don’t want this. They’ll rip me to shreds because I’m not a technical expert on any of this. Let me do a written statement.” So we went with that. Professor Ray Goldberg, an agriculture expert from Harvard University, was on the ADM board at the time. Ray read my statement and called to ask if he could publish it in his next book. I plunged back into the research and rewrote the statement into a report: The Partnership of Biodiversity and High-Yield Agricultural Production.
The gist of this paper’s argument is simple, but it represents the core reason I so often stress the productivity of American farmers as essential to a comprehensive, sustainable approach to reducing global hunger. It’s not because America needs to feed every hungry person in the world with food grown on our soil. (I’ll explain later that I support shifting food aid strategies to use more local purchase from farmers in food-insecure regions.) However, efficient, high-yield agricultural production in the United States has saved millions of acres of habitat, helped stabilize prices, and created the food storage needed to support food aid in situations where that is the only option. At the rate that China, India, and other areas of the developing world are growing, their food needs are increasing dramatically too. When we increase our yields to help supply those markets, we diminish the pressure on fragile ecosystems elsewhere. We also maintain a valuable surplus for emergencies.
ADM was my first, but not last, experience inside a huge global corporation. I also joined the boards of Lindsay, ConAgra Foods, Coca-Cola Enterprises (formerly the largest bottler of Coca-Cola products), and then later the parent Coca-Cola Company. And I have sat on the board of Berkshire Hathaway since 1993. It is true that corporate agendas have shaped a lot of agricultural research to focus mainly on large-scale production, and we need to broaden our horizons, as we’ll talk about later. But just as I often cringe when economists or political scientists write about farming without understanding it, I also cringe when I hear activists and environmentalists treating all big corporations as greedy monoliths that must be regulated into submission. There are smart, open-minded people in every sector who care about addressing human suffering, responding to critical needs, and protecting the environment.
Like our global ecosystem, the food economy benefits from diversity. Farming conditions, markets, and local tastes and needs are different all around the world. We need everybody at the table to fight hunger.
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I. As you’ll note in part 5, Brazil has adjusted its policies over time to reduce rain forest destruction in the Amazon.
Story 6
The Ovarian Lottery
When my mother, Susan Thompson Buffett, did the first, last, and only television interview of her entire life with PBS’s Charlie Rose in 2004, she had recently recovered from oral cancer. Some who saw the interview noticed her slight speech impediment and thought that perhaps she’d suffered a stroke, but that was not it. She had made great strides in learning to speak again after her surgeries, but it was still a struggle. Fortunately, it did not undermine her sharp but never unkind sense of humor. She was talking about my father and some of the dynamics of their relationship, and she said with a mischievous smile: “I thought I’d marry somebody like a minister or a doctor—somebody who would do some valuable service for human beings. Marrying somebody who makes piles of money is sort of the antithesis of what I thought I’d do. But I know what he is. There is no finer human being than who he is . . . so I overlooked the money.”1
My mother passed away later that year from a cerebral hemorrhage. She and my father were visiting friends in Wyoming. They were together when she died. Our friend the great rock star Bono of U2 sang at her funeral. And for a woman who “overlooked the money,” Forbes magazine listed her as the 153rd richest person in the world in 2004. Her Berkshire Hathaway stock stake was worth around $3 billion.
Our family’s involvement with philanthropy has been a source of curiosity to reporters and others for a long time. My dad said famously that he would never consider giving his children the bulk of his money, and people would sometimes talk about this statement as if it hinted at a rift between us. That was never the case. He had seen the children of other successful executives develop an attitude of entitlement that he did not want in his children. He is practical. Just as when he made me present a plan that would yield him a profit on the farmland he offered to purchase, he always wants the numbers to add up. My mother, meanwhile, had a lifelong interest in empowering people and especially in helping all children reach their potential. She loved hosting exchange students from exotic places, but she also worked with low-income children in Omaha. She was appalled and offended by any kind of discrimination. She had a bumper sticker on her car that read “Nice people come in all colors.” To her shock, someone once scratched out “all colors” and wrote “white” over it.
In large part due to my mother’s interest and inspiration, my brother and sister and I began our first efforts in philanthropy in the late 1980s. My parents brought us together, and my dad said he was starting a family foundation. Each of us would get to determine where $100,000 a year should be donated. It was aimed primarily at giving opportunities locally: everything from the Nebraska Game and Parks Commission to the Big
Brothers Big Sisters of America to the Chicano Awareness Head Start Program. I dubbed it the Sherwood Foundation, as an allusion to Robin Hood and his merry men distributing the money they took from the rich.
I think each of us ended up appreciating that low-key introduction, which was enough money to help these organizations without tempting us to get ahead of our own ability to analyze and make sound philanthropic investments. Soon we each wanted to do more. In 1999, my parents decided that it was time for us to start working with larger amounts of money to have an impact in the philanthropic areas we chose. Soon after, Susie, Peter, and I each received roughly $26.5 million to launch our individual foundations. It was during this period that I made some initial forays into wildlife conservation, and not long after that we purchased a large fenced parcel of land in the Limpopo region of South Africa to set up a cheetah habitat and research center called Jubatus.
Around this period I had my epiphany about how I was never going to make a significant difference in wildlife conservation if I wasn’t willing to make a difference in the lives of people who were starving. My mother and I traveled in Africa together in 2002, and she and I talked frequently about philanthropy. I think she was happy with the impact that my travels and my photography were having on my larger sense of responsibility to contribute to the world.
Traveling to South Africa in 2002 with my mom and HWB was an unforgettable experience; we enjoyed sharing her passion for people and for life. Photo: Paul Laing
Her cancer diagnosis came as a shock in 2003, and we rallied round her. As she said to Charlie Rose, she was putting a little more heat on my dad to free up more of his wealth for philanthropic causes. My mother had her own shares of Berkshire Hathaway, and in January 2004 she made her second gift to all three of our foundations: this time, shares valued at $51.4 million. I can’t imagine a more loving gesture. My mother had seemed to make a good recovery from the cancer, and so her sudden death in 2004 rocked us all. We all knew the world had lost a real force. But she had found yet another way to inspire us to do good in the world. She had made provisions in her will for our foundations, and her estate gifted $51.6 million each to Susie’s, Peter’s, and my foundations in 2005.
My father was devastated by my mother’s death—she was his best friend and partner in life. As many accounts have noted, he was so distraught that he could not bring himself to attend her funeral. We all felt a little more alone, but my father felt it deeply. I think he had always enjoyed the thought of being able to give my mother significant funds to make a difference in the world. He always thought she would outlive him. What would happen now?
Well, I think he sat down and looked at the numbers. Giving away money is a complicated business, as I appreciate more and more all the time. I have met so many decent, optimistic, generous people who want to make a difference, but they become disillusioned with the difficulty of finding the right fit for their philanthropic interests. Almost by definition, the causes that need the support the most often do not have the infrastructure, management talent, or strategic plan needed to deploy large amounts of capital efficiently. It’s tempting to pick projects that are straightforward and “doable.” There is nothing diabolical about that. The problem is that those kinds of projects are one-offs. The gains may not be sustainable, and the impact tends to be local or limited. Meanwhile, there are some global organizations that do good work, but they have grown to a size that limits their ability to innovate, and administrative costs and approaches seem to produce fewer and fewer returns.
I think my father looked around at the philanthropy sector and, without my mother to take the lead, understood that he needed an organizational structure capable of handling a gift at this scale. That shrank the universe, and he realized that the existing foundation with the broadest and most robust structure for handling a large gift was the Bill & Melinda Gates Foundation. At this point, in 2006, it was already managing $29 billion and employed more than two hundred people.2 The foundation was going after global challenges where it hoped to have a broad impact. That mission appealed to him.
However, he also liked what Peter, Susie, and I were doing, and he decided on a generous course of philanthropic investing with us as well: his commitment to Gates was worth about $31 billion at the time. As with the Gates commitment, his gifts to us were based on the conditions that we personally would be alive and active in our foundations and that we followed certain legal requirements such that his gifts were charitable. He pledged the equivalent of more than $1 billion to each of our foundations to be distributed over many years. This decision was a dramatic change in the scope and resources available to us, and it has fueled our exciting journey. As a gift to the three of us on his eighty-second birthday in August 2012, he announced that he was going to double his commitment.
To me, perhaps the most inspirational element of this experience has been my dad’s expressed wish that we tackle the hardest problems. Unlike many NGOs, we are not dependent on demonstrating “success” to our benefactors during fundraising drives. We can jump into difficult situations and help people who have no other option and no other resource. We also have the luxury to learn from our mistakes and recalibrate.
As he mentioned in the foreword, my dad has a concept he calls the “ovarian lottery”: the notion that the degree to which you are likely to prosper is determined by the circumstances of your birth. He has described this concept in different ways at different times. He sometimes says, for example, that if you had the choice to be born in Bangladesh and pay no taxes or be born in the United States and pay some taxes, what percentage of your income would you be willing to part with to be born here? He believes that the opportunities available to a person with intelligence, drive, and spirit in the United States are different from what a person with the same profile, born into a Chad refugee camp or some remote village in El Salvador, could possibly hope to leverage.
Until fairly late in his life, he left it to my mother to figure out how to have that impact. My mother worked on a lot of community projects when we were young, but in later years, she focused on just a few larger areas. She was a passionate supporter of civil rights, and she advocated for family planning and reproductive rights for women globally. She wanted to work to raise the standard of living for people who found themselves in difficult, often extreme situations. It was about basic freedoms and fairness.
The ovarian lottery is not just a clever way to explain how fortunate we are. It is the reality for these Ethiopian mothers and their hungry children—and for hundreds of millions of others born into difficult circumstances around the world. Photo: Howard G. Buffett
If you knew my mother, and even if you just watch the Charlie Rose segment, I think you can imagine why my father never worried about what would happen to the bulk of his fortune. As she said, making money has always been part of the “scorecard” of my father’s life, but he’s pretty indifferent to spending it. He just isn’t interested in the luxury items and displays of wealth that some in his position embrace. He loves the competitive aspect of investing—the idea that he can read the same material as anyone else and figure out a strategy that creates an outstanding return, when many others lack the patience and discipline to consider how a market is likely to develop in the short, medium, and long term. But he knew that my mother had a beautiful, giving spirit and that she was smart and unselfish. He trusted her completely to do good things for the world with his fortune.
I’m driven to honor my mother’s legacy as well, and it’s one reason I am working so hard on my thirty remaining chances. I think of her every day, and I am grateful that she launched us all on such an amazing and important course.
Story 7
Reality Has a Nutty Taste, Especially When Fried
If I had a stronger stomach, I might never have gone to Malawi.
On a map, the small African nation of Malawi looks like an elongated cornflake. It is a narrow, landlocked country in the tropics of southeastern Africa, next to Zambia. It
s dominant geographic feature is Lake Malawi, which runs about two-thirds of its length along its eastern borders with Tanzania and Mozambique. Despite that huge body of water, most of the country’s arable land rises up from the lake, so the agriculture there is mostly rain fed and often subject to droughts. Malawi is a densely populated and extremely poor nation, and its population has one of the lowest levels of protein consumed per capita in sub-Saharan Africa.1 More than 80 percent of the population live in rural areas, and the vast majority of homes have no electricity. The World Bank estimates the steadily growing population at roughly fifteen million people, and that has put profound pressure on the agricultural land, which is hampered to begin with by sandy, highly acidic soils.
In many parts of central and south Malawi, as in other parts of Africa, the villages seem to grow out of the earth itself. The rural houses tend to be made with bricks fashioned from the reddish soil. The roofs are often thatched grass. If a family saves some extra money, getting a corrugated metal roof is desirable and a bit of a status symbol. The fences and animal enclosures are made from sticks and branches interwoven and lashed together with cords. The women wear chitenjes, large pieces of bright cloth that they use for skirts and for baby carriers. In rural areas, many people go to local markets to buy used shirts, pants, and shoes that enterprising locals buy from traders. Also, many items of clothing collected in charitable aid drives in the developed world find their way to Malawi. It’s odd but not uncommon to see children in remote areas wearing T-shirts promoting American television shows or sports teams.
There are many Americans who had never even heard of Malawi before 2006, when Madonna visited the country and adopted a little boy and, later, a little girl. But in my mind, Malawi will always represent something that has become fundamental to the regard and respect I have for those working in development and hunger reduction around the world. To appreciate the unique conditions in any location where you want to make a difference, you have to spend time on the ground. You can read a library full of books, but until you venture beyond the airports and the conference hotels and the NGO offices, you will not understand the nuances of what’s at stake and what people face.
40 Chances Page 7