SMALL FARMS, BIG PORTIONS
23 Nov 1996
The Economist
A story which states that fertilizers and genetically-engineered crops
are great technologies, but that the misappliance of economics, rather
than a lack of technology, that has done most to victimize the world's
800m hungry people.
The story cites a growing body of evidence suggests that governments in
many developing countries, often egged on by "experts" from the rich
world, have discriminated against their farmers, with disastrous results.
A five-volume World Bank study of 18 developing countries during 196o-
85, for example, found that farmers had been penalized in a host of
ways. Their ability to trade had been harmed by overvalued exchange
rates and export quotas. They had been forced to sell produce to
state-run food monopolies at artificially low prices.
The Economist says that protection of domestic manufacturers, meanwhile,
forced up the price paid by farmers for various necessities and reduced
their purchasing power as consumers. The net effect of such policies was
a huge transfer of income out of agriculture - equivalent to 46% of the
countries' agricultural GDP each year, according to the study.
While the policies may have seemed sensible at the time, economically
such policies were flawed, says the story. Farmers, it turns out, are
very responsive to price changes. Large, mechanised farms are not
necessarily more efficient. Given the right incentives, small farms using
family labour can be as productive as large ones. In China, whose farm
sector has grown by 6% each year for over a decade, the average farm is a
mere half a hectare in size. The World Bank study found that the less
countries discriminated against agriculture, the higher their rates of
growth, both in agriculture and across the economy as a whole.
The story argues that higher returns on agriculture should lead to more
rural jobs, which puts money in the pockets of the hungry.
ACLARK@crop.uoguelph.ca
Dr. E. Ann Clark
Associate Professor
Crop Science
University of Guelph
Guelph, ON N1G 2W1
Phone: 519-824-4120 Ext. 2508
FAX: 519 763-8933