Agricultural Instability Threatens Political, Economic Development





Nick Cullather is the author of The Hungry World: America’s Cold War Battle Against Poverty in Asia (2010), a finalist for this year’s Lionel Gelber Prize for the best book on global affairs. He is Associate Professor of History at Indiana University.

It is in the cities that the 2011 food crisis hits hardest.  The revolution in Tunis began as a food riot.  As markets in Cairo, Algiers, and Sanaa erupt, dictators are scrambling to buy off the opposition by lowering prices, but grain is scarce, and reports from the UN and the World Bank put the blame on overpopulation and climate.

Last year’s La Niña blighted harvests in Canada, Russia and the Ukraine, and the U.S. Department of Agriculture warns that an overcrowded earth is “putting unsustainable pressure on resources.”  But in 2009, when weather was good, things were not that much better.  Prices get high-level attention in the odd years when they are high, not in the typical years when they are typically abysmal.

2002, the index year against which the current disaster is measured, was the bottom of a steep 50-year decline in prices.  Commodities were cheaper by half than they are now, and there was no world crisis, only local misery.  Bankrupted peasants abandoned Chinese villages for urban slums.  Twenty thousand Punjabi farmers committed suicide.  Sugar workers clashed with police in Mexico, and Nebraska farmers took jobs at Wal-Mart to stave off foreclosure. 

At last week’s Davos forum, French prime minister Nicolas Sarkozy and World Bank President Robert Zoellick urged stockpiles and “weather insurance or a rainfall index” as practical steps for dealing with nature’s limitations.

There may be another problem too, but it is hardly surprising that world leaders should overlook it.  Since the 1950s, chronic underinvestment in agriculture has been considered a normal feature of a healthy, growing economy.  For most of the twentieth century, a successful farm policy was one that delivered cheap food to urban consumers, whatever the cost at the producing end.

In the 1930s, German and Soviet planners first began to speak of an “agricultural sector,” a subordinate economy-within-the-economy whose profits could be diverted, by force if necessary, into industrial expansion.  Émigré economists brought the concept to Washington, but Franklin Roosevelt initially went a different way.

New Dealers lifted food prices by creating artificial scarcities.  In three years farm earnings rose to “parity” with 1916, the best year on record, and there they stayed.  When the Supreme Court threw out the Agricultural Adjustment Act, policy shifted toward subsidies that held farm income steady while filling grocery shelves with  low-cost staples.  By the end of the 1930s, according to Rebecca West, all countries—communist, fascist, and capitalist—had accepted “the insane dispensation which pays the food-producer worst of all workers.”

Dual-economy theory soon entered the canon of development policy.  Nobel economist W. Arthur Lewis realized in 1952 that the function of the rural sector was as a “reservoir of cheap labor” for the urban sector.  Development models were built around the “zero value” doctrine, which held that non-industrial production had no measurable worth until liberated for use in manufacturing.

Newly independent regimes saw the potential.  India’s five-year plans defined agriculture as “a bargain sector, which can produce the requisite surplus with relatively low investment and in a comparatively short time.”  Taxes, price controls, duties and currency policies were subtly or overtly designed to siphon “waste” profits from rural producers.  Enterprise was punished by anti-profiteering laws applied solely to the farm sector.  Cheap food meant cheap labor, which gave emerging Asia its competitive edge.  The Kennedy administration helped, depressing prices still further by flooding Asian markets with surplus wheat.

By 1965, India’s farmers had given up, and the country depended on an unsustainable 11 million tons of American grain.  Policy had to change, and it did.  The Green Revolution was hailed as the salvation of millions from drought and overpopulation, but it actually rescued Asia from its catastrophic disinvestment in agriculture.  Dwarf wheat, Norman Borlaug explained, was only a “catalyst” for policies that returned resources to the countryside, especially price supports which gave peasants a rare chance to make a decent living.

Governments took the lesson and food production rose dramatically, but the 1980s debt crisis forced African and Latin American countries again to squeeze their rural sectors for cash.  A neo-liberal consensus dismantled the remaining credit and subsidy programs, and when food prices spiked in the 1990s experts spoke soberly about climate and overpopulation. 

Agriculture is a transparent, responsive sector, and quick profits fueled a production boom followed by the market collapse of 2002.  The cycles have become sharper.  The 2008 peak was followed by a 50 percent plunge in soy prices and then this year’s surge.

The price of onions in India is up 80 percent; South Korea and the Philippines face shortages of fish and powdered milk, and countries around the world are reaching for the standby solutions, cracking down on hoarders and adjusting quotas and duties to force down local food prices.

Last week the World Economic Forum, in an uneasy forecast, questioned whether farmers could meet the twin challenges of demography and climate.  If history is any guide, they can, as they have in the past, but not unless they get paid.  A recent poll shows half of India’s farmers want to quit.  Many who till high-risk lands on which the expansion of the food supply depends have already given up and left the losing sector to seek a place in the winning one.  There, like the mobs in Tunis, they can demand food, instead of having to grow it.

A lasting fix will require more than an adjustment to allow cultivators to survive.  It will require unlearning a half century of dogma which relegates agriculture to a subordinate status.  The global economy includes the global countryside, and the return of prosperity will have to begin there.

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Nick Cullather - 2/2/2011

Here is the cite:

http://tinyurl.com/66klyms


Nick Cullather - 2/2/2011

James:

They aren't the cause this time. The global recession is still dampening demand. Consumption--whether from ethanol, population or Chinese affluence--is still slack compared to years past. This is a problem of production, which is way down owing to the reasons I describe.


Peter Kovachev - 2/1/2011

It's time to mention the obvious and the unpopular: The effect, if not the aim, by centralized planners is to create a permanently locked class of agrarian serfs bound to their little plots, and artificially prevented from improving their lot by increasing and modernizing production through high technology and cheap energy.

Look at Africa as an example of this process; first, millions of agrarians were decimated by malaria when the most effective weapon, DDT, was banned on the flimsy pretense of a pseudoscientific rumour started by an eco-nutter, Rachel Carson, and her *Silent Spring,* a book which deserves to be put on the same shelf as *Mein Kampf.* Massive international aid prevents farmers from even attempting to compete and empowers local elites. A medievalist, protectionist cabal that is the EU, prevents, limits or control African producers from competing with its own subsidized and barely productive farmers, all thanks to a well-schemed regulations and a ban against GM crops...another legislated pseudoscientific scare. And while Africans sit atop stupendous coal reserves which can fuel an agricultural and industrial revolution on that continent, the UN's "global warming" schemers are all set to prevent Africans from accessing them. Instead, Africans must listen to cadres of White First World volunteer teenagers pushing "sustainable" ...i.e., next to totally useless... hand-pumps, solar panels, windmills and whatever a few select corporations in the "green" club come up with next in their search for state subsidies. Like those unfortunates on Mad Prince Charles' eco-paradise in Wales, farmers are now expected to crawl on their bellies, kill pests with their finger nails, weed by hand and collect kitchen scraps and s**t for fertilizer.

While there never was a "silent spring," the deadly central planning policies and "assistance" to which Africa is being increasingly subjected amount to a "silent genocide." Hobbling farmers with inefficient energy sources, lack of safe and effective pesticides, myriads of incomprehensible and senseless regulations, cleverly crafted and marketed "organic" and "locavore" myths, kooky schemes like the bio-fuels mentioned by Mr Loewen, all these ultimately lead to serfdom, population explosions, the growth of international bureaucracies, enrichment of compliant cleptocrats and tyrants, expensive food and eventually, another planned global famine.

Yet, if anyone is to ask what the small scale farmer really wants, it's to get away from land entirely, or at least from back-breaking low-tech labour on unprofitable small plots. They want modern labour-saving farm and process equipment, automobiles, good houses with central heating, air conditioning and swimming pools ... and cheap, efficient energy to power all that. They want leisure time, protection from tyrants and robbers, a say in how they are governed and education and a future for their kids ... in short, to approximate the lifestyles of the self-proclaimed eco-messiahs like Al Gore.

In the nearly ten thousand year history of agriculture, various potentates ranging from band leaders, village chiefs, the Church, landed nobility, nation states and now global bureaucracies, have attempted to keep the agrarian on the land, to subject him to misinformation and poor education, to keep him from political power and wealth ... a living composite portrait of the stupid, superstitious dirty, half-starved, disarmed clod with a dozen children whose sole "suite of skill" consists of plowing, weeding and s**t-gathering. Modern technology, cheap energy sources, free enterprise and political enfranchisement have finally, after ten millennia, begun to liberate the farmer from the soil. What we are now witnessing with the ideologically and bureaucratically-contrived enviro-myths and growth-strangling regulations is simply an elaborate and desperate attempt to roll back this evolutionary and revolutionary process.


James W Loewen - 1/31/2011

I'm amazed that ethanol and population control were never mentioned. Using grain (and some other agricultural products) for fuel has already caused food shortages and promises more, as fuel shortages outpace food shortages. If prices rise, maybe fewer Third World farmers will quit. However, what then is to be done about the population growth that rural folks usually produce?


Heidi Exline - 1/31/2011

Hi, Can you please tell me the name of the poll done with Indian farmers and where I can find the results? thank you