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Food Prices and Agricultural Development

by linca Wed Apr 30th, 2008 at 03:04:02 AM EST

So, food prices are high, riots are happening around the world, the crisis is on... What if this was a good thing ?

I'll link and quote an article by Marcel Mazoyer and Laurence Roudart,two professors in France's foremost agronomic institution, the INAPG. Marcel Mazoyer holds the chair formerly occupied by René Dumont, the first Green presidential candidate in France in 1981.

In this piece, Sustainability of agricultures and globalization, they point out that famine and many problems faced by agricultural workers in the third world come directly from low food prices.

Diary rescue by Migeru


The basic problem is thusly summed up :

During the second half of the 20th century, the world's population multiplied by 2.4, i.e. it increased from 2.5 billion persons in 1950 to 6 billion in 2000. During the same time, agricultural and food production multiplied by 2.6 (FAO, Faostat). Thus, the latter progressed a little more quickly than the population. Furthermore, the global agricultural output growth has been much higher during the last 50 years than during the 10,000 years of agricultural history. While bypassing the most optimistic expectations, this gigantic progress has limits and drawbacks however : three quarters of the peasants in the world are still working with manual tools only (e.g. hoe, spade, digger stick, machette, harvester knife, sickle...). Meanwhile, one third of humanity suffers from serious food deficiencies, and farmers constitute the majority of the poor and of the undernourished of the planet.

The majority of peasants in the third world are stuck with agricultural methods that went out of fashion in the High Middle Ages... And the productivity that comes with it : whereas these tools only allow a worker to cultivate about 1 hectare,  or 2.5 acres by himself, and yield thus 1 ton of grain from his work, a 1900 European or American peasant, using animal traction and basic industrially produced tools, could cultivate ten times the area, and get about 10 tons of grain for his work, and thus was already 10 times more productive ; the modern peasant of the developed world, with industrial machinery, can cultivate 200 hectares, and the increased yield of modern crops means his production may reach 2,000 tons of grain - that worker is thus two thousand times more productive...

This extraordinary rise in productivity - and production - is faster than population growth : thus grain prices, over the 20th century, have been steadily going down. Because of that, even the extremely productive peasants of the developed countries have to be heavily subsidized. But the Third World farmer, facing not only his dismal productivity, also often does not own as much land as he could cultivate : because of overpopulation, as in Bangladesh, and because of inequality in land distribution, as in Latin America, where latifundism means a few landowners own most of the land, leaving the rest with too little land to live on.

These small peasants, who are in the majority in Africa - 80% of land workers - and in South America - 60% - could rise their productivity if they could have access to the selected varieties of the Green Revolution, buy some animals, increase the size of their holdings. But because food prices are low, selling enough grain to make those improvements would leave them starving - a bad year already means starving, because some of the grains have to be sold anyway, to pay debts or taxes.

Many of these rural peasants have to leave the countryside and move to the slums, attracted to large city life, and the higher income that can be gained there. But this surplus of labour means wages remain very low in the city - and when food prices rise, these new urbanites can't eat any more.

Thus governments are faced with contradicting incentives : urban populations demand for cheaper food, whereas rural development requires higher prices, less the country's agriculture disappears. Developed countries, on the other hand, lobby for the ability to export their surplus grain in the third world, which fits well with the "Free Trade For Everything" mood in international relationships. Of course, this means many countries see their food independence greatly diminished. And actual famine comes in underdeveloped peasants, who in a bad yield can't buy enough food before the next harvest.

The choice of low food price and free trade, or protectionism and higher food prices, is thus an arbitrage between the demands of the angry urban population and the needs of the hungry rural farmers. But is a solution that implies letting agriculture in developing countries rot a real solution ?

Another consequence of the rural exodus is that the less productive land in the third world is given up and remains fallow. But as the population keeps rising, as the unsustainability of some of the more intensive agricultural methods lower the most impressive yields, these lands will be needed one day too. If there is nobody left knowing how to cultivate them, there is going to be a problem...

Display:
Food prices are rising because demand is rising because populations and living standards (in some countries/sectors) are rising.  Production isn't keeping up because energy, wage and input costs are rising (for farmers in the developed world) and because of land availability issues in much of the underdeveloped world.  On balance higher prices will help stimulate more production, but this exacerbate existing problems of land availability and income inequality.  Greater counter market government interventions are required to counter-act this growing income inequality but neo-liberalism frames such interventions as market distortions.  Of course they are - just as famine in a world of plenty is a moral and humanitarian distortion.  Which is the more important frame of reference?

"It's a mystery to me - the game commences, For the usual fee - plus expenses, Confidential information - it's in my diary..."
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Apr 18th, 2008 at 09:34:15 AM EST
The problem in the underdeveloped world is not only land availability - quite literally, agriculture there is stuck in Antiquity. That limits production much more that land availability - the Green Revolution proved that parts of the Third World could raise productivity with better techniques.

Also, from the point of view of income inequality, let's remember that the rioters in Mexico and Egypt tend to be urban dwellers - who are wealthier than land workers. The ones going hungry are the food producers.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Fri Apr 18th, 2008 at 09:46:48 AM EST
[ Parent ]
If there is nobody left knowing how to cultivate them, there is going to be a problem...

I pointed this out the other day in Bruce McF's latest Arc of the Sun diary. And that current prices might persuade peasant farmers to stay on the land - though we have to stop bringing world prices down with our subsidised exports (we = EU & US).

OTOH, we shouldn't give up farming. There's a free-trade notion that says we don't need agriculture any more (like we didn't need industry?), and we should just import from the cheapest bidder (comparative advantage). Which, practically, means buying from Cairns Group and emerging agri-countries that run wide-scale production of dubious sustainability. And (Doha Round) from plantation-type farming that should be encouraged (invested in by capitalists) in poorer countries, where lucky peasant farmers will be able to get wage-slave jobs and we will be told they have been raised out of poverty.

My view is we should aim at self-sufficiency, as far as possible, for all. Free-traders' schemes take no account of ecology or of human society, do not cost these into their utilitarian calculations, forget past agronomic experience of virgin deforested soils exhausted by colonial cropping (North American forest, C17 - C19?). Rather than go for plantation monocultures, we should encourage sustainable, smart small farming providing basic food plus cash crops for sale on regional and national markets. Food will be more expensive? Good. Then it will pay farmers to stay on the land, it will maintain and enrich social structures that are otherwise doomed by uprooting and flight to the cities.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Apr 18th, 2008 at 09:58:40 AM EST
Damn, I knew I had forgotten a couple paragraphs in the end. Thanks for writing them ! :)

Another point made by Mazoyer is that large-scale farms are actually quite inefficient ; that economies of scale happen only up to 5-7 workers per production units, and that after that you meet diseconomies of scale.

Also, the amount of food GDP going to the producer will rise again : even France or the US spend ~15% of GDP on food, but most of that goes to Agrobusiness and supermarket nowadays, not farmers. i.e. food prices for the end buyer need not rise that much.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Fri Apr 18th, 2008 at 10:28:16 AM EST
[ Parent ]
Another point made by Mazoyer is that large-scale farms are actually quite inefficient ; that economies of scale happen only up to 5-7 workers per production units, and that after that you meet diseconomies of scale.

That's interesting... So what is the optimal farm size, in terms of people and land area?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Migeru (migeru at eurotrib dot com) on Sun May 11th, 2008 at 08:52:10 AM EST
[ Parent ]
What I said, 5-7 people seem to be the maximum amount people that work efficiently on an agricultural exploitation before you have to add in various administrative and coordination tasks.

Land area OTOH is very variable, depending on the type of production, the amount of capital available... A shepherd with a dog can look over a much larger herd than without...

The insight is that agriculture is very easy to decentralise, which is why economies of scale don't apply.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Sun May 11th, 2008 at 08:44:49 PM EST
[ Parent ]
Self-sufficiency in basic needs is necessary for a sustainable economy. If the US or EU are importing either our food needs from elsewhere, or our energy needs from elsewhere, then intrinsically we have a technological system that cannot be replicated around the world, because there is no "elsewhere" for the whole world to import from.

At least, not in this century ... maybe we can get an elsewhere to import some high value things from down the track, if we don't screw the pooch too badly in this coming century.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Apr 30th, 2008 at 09:54:18 AM EST
[ Parent ]
... if it is necessary to subsidize food to avoid food riots, then it becomes critical to be food self-sufficient, because a government can create additional domestic purchasing power to mobilize domestic resources, but a low-income nation that tries to create additional domestic purchasing power to buy imported products just drives down its sustainable exchange rate.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Wed Apr 30th, 2008 at 10:00:00 AM EST
[ Parent ]

Rice traders hit by panic as prices surge

Rice prices hit the $1,000-a-tonne level for the first time on Thursday as panicking importers scrambled to secure supplies, exacerbating the tightness already provoked by export restrictions in Vietnam, India, Egypt, China and Cambodia.

The jump came as the Philippines, the largest rice importer, failed for the fourth time to secure as much rice as it wanted.

The unsuccessful tender followed Bangladesh's inability to buy any rice at all this week.

Traders and analysts warned that rice demand was escalating in spite of prices rising to three times the level of a year ago as countries try to build up stocks.

Your long term point is well made, but the short term disruptions are huge, and very dangerous...


In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Fri Apr 18th, 2008 at 10:12:54 AM EST
Well, this looks like a speculation-based spike rather than an actual, long term increase of the prices by three. Protectionism, national reserves should allow to protect the actual populations of such prices increases, as in electricity. The price of a baguette was regulated until 20 years ago, in France...

But corrupt, indebted, "reformed" governments have been unable to undertake such preventative measures and are now fighting for the last grain of rice available...

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Fri Apr 18th, 2008 at 10:22:28 AM EST
[ Parent ]
So it's panic, not speculation.

you are the media you consume.

by MillMan (millguy at gmail) on Fri Apr 18th, 2008 at 04:13:50 PM EST
[ Parent ]
What a horrible graph - why don't they use log scale?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Migeru (migeru at eurotrib dot com) on Sun May 11th, 2008 at 08:53:20 AM EST
[ Parent ]
There is also the small issue of the petroleum-based energy input into the production process. Even in the U.S., gasoline tractors were pretty primitive and rare before 1950. My uncle's farm in Nebraska spends 1/3 of its outlays on energy for the irrigation system pumping, and another big chunk to drive the tractors and combine harvesters. Without that energy input, his farm would revert to a pile of beach sand.
by asdf on Fri Apr 18th, 2008 at 09:38:47 PM EST
Yes, that's part of the reasons why your uncle produces as much grain as two thousand African farmers. The factors are

-Energy : contrast gas and men's muscles. If they could get some animal traction, it'd be nice.

-Ways to renew the fertility of the ground : your uncle uses various kind of chemicals (not all of which necessarily pollute), whereas the African farmer is probably using his excrement, or burnt wood in the southern parts of the continent where they are still doing Slash and Burn. But animal manure would increase productivity of the land, and works nicely with the preceding factor.

-Tools : Without energy, the plow is useless... And without capital, many tools are not accessible to the African farmer.

-Cultivated Varieties : one of the problem of developing world is that much work was put into selecting varieties adapted for industrial agriculture, of wheat, corn and rice, or for exportation, like coffee. Not as much work was put into variety selection of plants used in the South, such as manioc, millet, sweet potato, bananas, or to adapt varieties of grain for the techniques of non-industrial agriculture...

-Water : small parcel mean the investment in agriculture has to be done collectively ; and there are problems with state stability in Africa... The State practically appeared when irrigation became a necessity, in Egypt, Mesopotamia, India, or even with the Inca.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Sat Apr 19th, 2008 at 04:15:57 AM EST
[ Parent ]
Ah, the binary landscape of the western Dakotas, Nebraska, Kansas, Oklahoma, and Texas.  (From the air it looks like a bunch of ones and zeros spread as far as the eye can see.)  Depleting the Ogallala Aquifer as fast possible.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Sat Apr 19th, 2008 at 01:27:05 PM EST
[ Parent ]
...on the food crisis: Raj Patel, author of the highly rated Stuffed and Starved, has a blog called, er, Stuffed and Starved full of regularly updated commentary and analysis of the food crisis.

The Heathlander
by heathlander on Mon Apr 21st, 2008 at 09:18:07 AM EST
on the run...  and short on sleep...

thread at FS

thread at MoA

FTR I disagree with many of linca's implicit and explicit claims and assumptions about the so-called "Green Revolution" -- but more on this later, just flying a protest flag for now :-)

The difference between theory and practise in practise ...

by DeAnander (de_at_daclarke_dot_org) on Wed Apr 30th, 2008 at 03:40:19 AM EST
More probably a case of misunderstanding than actual disagreement : these are Roudart and Mazoyer's points, summed up in the piece, and then summed up by me.

Their point about the Green Revolution (which is further developed in their book, A History of World Agriculture) is not about extending it to small farmers in the third world, and with it extending agribusiness's hold on them ; but rather, use some of the scientific techniques and scientists developed along the Green Revolution, reorient them to a closer collaboration and study of existing "traditional" agricultural practice, and participation in the development of techniques and varieties geared towards the economic and agricultural needs of those peasants.

That is, use the science of the Green Revolution to develop a productive rustic manioc rather than wheat or maize needing a lot of irrigation and chemicals.

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Wed Apr 30th, 2008 at 06:03:14 AM EST
[ Parent ]


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