Paul Collier Wants More and Bigger Agribusinesses

He writes, over at Martin Wolf's place at the Financial Times:

FT.com | The Economists’ Forum | Food crisis is a chance to reform global agriculture: Paul Collier: The sharp increase in the world price of staple foods is an inconvenience for consumers in the rich world, but for consumers in the poorest countries, especially in Africa, it is a catastrophe. Despite the predominance of peasant agriculture, most African countries are net food importers and food accounts for over half of the budget of low-income households. This is the result of decades of agricultural stagnation combined with growing populations. Although many of the net purchasers are rural, evidently the problem is at its most intense in the urban slums. These slums are political powder kegs and so rising food prices have already triggered riots. Indeed, they sow the seeds of an ugly and destructive populist politics.

Why have food prices rocketed? Paradoxically, this squeeze on the poorest has come about as a result of the success of globalization in reducing world poverty. As China develops, helped by its massive exports to our markets, millions of Chinese households have started to eat better. Better means not just more food but more meat, the new luxury. But to produce a kilo of meat takes six kilos of grain. Livestock reared for meat to be consumed in Asia are now eating the grain that would previously have been eaten by the African poor. So what is the remedy?

The best solution to a problem is often not closely related to its cause (a proposition that that might be recognized in the climate change debate). China’s long march to prosperity is something to celebrate. The remedy to high food prices is to increase food supply, something that is entirely feasible. The most realistic way to raise global supply is to replicate the Brazilian model of large, technologically sophisticated agro-companies supplying for the world market. To give one remarkable example, the time between harvesting one crop and planting the next, in effect the downtime for land, has been reduced an astounding thirty minutes. There are still many areas of the world that have good land which could be used far more productively if it was properly managed by large companies. For example, almost 90% of Mozambique’s land, an enormous area, is idle.

Unfortunately, large-scale commercial agriculture is unromantic. We laud the production style of the peasant: environmentally sustainable and human in scale. In respect of manufacturing and services we grew out of this fantasy years ago, but in agriculture it continues to contaminate our policies. In Europe and Japan huge public resources have been devoted to propping up small farms. The best that can be said for these policies is that we can afford them. In Africa, which cannot afford them, development agencies have oriented their entire efforts on agricultural development to peasant style production. As a result, Africa has less large-scale commercial agriculture than it had fifty years ago. Unfortunately, peasant farming is generally not well-suited to innovation and investment: the result has been that African agriculture has fallen further and further behind the advancing productivity frontier of the globalized commercial model. Indeed, during the present phase of high prices the FAO is worried that African peasants are likely to reduce their production because they cannot finance the increased cost of fertilizer inputs. While there are partial solutions to this problem through subsidies and credit schemes, large scale commercial agriculture simply does not face this problem: if output prices rise by more than input prices, production will be expanded because credit lines are well-established.

Our longstanding agricultural romanticism has been compounded by our new-found environmental romanticism. In the United States fears of climate change have been manipulated by shrewd interests to produce grotesquely inefficient subsidies for bio-fuel. Around a third of American grain production has rapidly been diverted into energy production. This switch demonstrates both the superb responsiveness of the market to price signals, and the shameful power of subsidy-hunting lobby groups. Given the depth of anti-Americanism in Europe it is, of course, fashionable to criticize the American folly with bio-fuels. But Europe has its equivalent follies.

First, the European Commission is now imitating the American bio-fuels policy. At present the programme is small enough to be unimportant, but we need to pull it back before it does real damage. We have surely learnt enough about European agriculture to realize how important it is to kill this incipient scam before we are engulfed by it. But the true European equivalent of America’s folly with bio-fuels is the ban on GM. Europe’s distinctive and deep-seated fears of science have been manipulated by the agricultural lobby into yet another form of protectionism. The ban on both the production and import of genetically modified crops has obviously retarded productivity growth in European agriculture: again, the best that can be said of it is that we are rich enough to afford such folly. But Europe is a major agricultural producer, so the cumulative consequence of this reduction in the growth of productivity has most surely rebounded onto world food markets. Further, and most cruelly, as an unintended side-effect the ban has terrified African governments into themselves banning genetic modification in case by growing modified crops they would permanently be shut out of selling to European markets. Africa definitely cannot afford this self-denial. It needs all the help it can possibly get from genetic modification. Not only is Africa currently being hit by rising food prices, over the longer term it will face climatic deterioration in the context of a rapidly growing population.

While the policies needed for the long term have been befuddled by romanticism, the short term global response has been pure beggar-thy-neighbour. It is easier for urban slum dwellers to riot than for farmers: riots need streets, not fields. And so, in the internal tussles between the interests of poor consumers and poor producers, the interests of consumers have prevailed. Governments in grain-exporting countries have swung prices in favour of their consumers and against their farmers by banning exports. These responses further politicize and fragment an already confused global food market. They increase the risks of investing in commercial-scale food production and drive up prices further in the food-importing countries. Unfortunately, trade in agriculture has been the main economic activity to have resisted being subject to global rules. We need stronger and fairer globalization, not less of it.

Comments

[Tuco]

"But the true European equivalent of America’s folly with bio-fuels is the ban on GM. Europe’s distinctive and deep-seated fears of science have been manipulated by the agricultural lobby into yet another form of protectionism. The ban on both the production and import of genetically modified crops has obviously retarded productivity growth in European agriculture: again, the best that can be said of it is that we are rich enough to afford such folly."

Can Paul Collier say Mon-san-to?

http://www.vanityfair.com/politics/features/2008/05/monsanto200805

http://www.ethicalinvesting.com/monsanto/terminator.shtml

[RW]

There is this commodity called potable water and we are already running out of it because it takes x amount to produce our food, y amount to support our industry and transport, and z amount to slake the thirst of a growing population (while removing and treating its waste) and x + y + z is fast approaching 100% of what can be taken without infrastructure (and concomitant environmental impact) on a scale that will dwarf what has come before. So some additional unknown amount of water supporting the several million other species on the planet along with their associated ecosystems must be taken.

What's that you say, global climate change appears to be reducing the amount of potable water available even further and the probability of ecosystem and large-scale crop failure in existing markets continues to increase? Ah well, you know the old saying, can't make an omelet without breaking some eggs ...or is it that the many must die so the few may live, or ...well, something like that anyway.

Has Collier ever been to Mozambique? Ignoring mere sociocultural impedimentia for the moment does he have have any idea what kind of infrastructure buildup would be necessary to develop all that relatively underutilized (by humans) arable land much less move material and goods to and from it?

But Collier's febrile ruminations aside the European rejection of GM may indeed prove futile in the long run; e.g., Heritage corns and maizes are among the more strongly guarded genetic lines in the world -- their historical significance aside such heritage strains represent essential sources of biodiversity should some disease strike one or more prominent crop varieties -- but manufactured genes have already begun to appear in the Mexican heritage maize stocks even though these are among the more isolated stocks in the world so it is probably only a matter of a relatively short period of time before readily hybridized species such as corn become effectively monoclonal.

[Gwailo]

Didn't Jonathan Swift suggest a solution a while back?

[RW]

Indeed Jonathan Swift did, in "A Modest Proposal" bless the man, and who knows we could find ourselves there err long (and I do so hope everyone possesses sufficient wealth and power to remain on the right side of the plate should that time come).

Why even Mr Swift himself (in an amusing appeal to authority) informs us the quality of milk-fed kid is excellent viz, "I have been assured by a very knowing American of my acquaintance in London that a young healthy child well nursed, is, at a year old, a most delicious nourishing and wholesome food, whether stewed, roasted, baked, or boiled; and I make no doubt that it will equally serve in a fricassee, or a ragout."

Why he mentions a fricassee in this context is a bit confusing as a more appropriate stock for that dish would seem to be tougher (but potentially more flavorful) meat -- the child's mother after her best breeding years were behind her perhaps -- but the thought is appreciated regardless as is the possibility of accompaniment by a good pinot grigio.

But of course if people are squeamish all this nastiness could be masked by adding human stock to a mix as was the case in the movie Solent Green or indirectly as is already increasingly the case worldwide by sequestering potable water for our own productive purposes while consigning the rest of the biosphere to the ash pit -- cannibalism and genocide at full arms length as it were -- but where would be the fun in that, or the flavor, eh?

[Rahul Tongia]

Let's leave aside natural variance in soil productivity. If you look at FAOstat data on yields, at a national level they vary by a factor of 6 for grains (or so), and experts tell me that technology makes a difference by a factor of perhaps 30-50 (per acre). That means INPUTS. Water (most of Africa is rain-fed, not irrigated), chemical fertilizers, and other technology. Some of this a achieveable with money. Some may be unsustainable. Doing back of the envelope calculations, a yield of 3-4x may be feasible in developing regions, but (1) who will pay for the inputs; (2) how will the population afford the output, given they rely on low input agriculture.

Even in a "green revolution" land like India, don't forget subsidies, which are mostly taken advantage of by larger farmers, not subsistence ones.

(see http://www.cs.cmu.edu/~rtongia/ict4sd_book.htm, and Chapter 3 for the subsection on agriculture). The book was based on our bringing together global ICT and global development experts. 5 years later I still find myself going back to some of the insights they gave.

Rahul Tongia

[shah8]

Interesting how neatly he sidesteps the whole West pressures african economy for exports, for less than the value of their production or utility.

[Scott Martens]

Let me get this straight: According to Collier, the solution to the world's food supply problems is the collectivization of agriculture?

Will wonders never cease.

[Kelly]

"This is the result of decades of agricultural stagnation combined with growing populations."

There are two parts in that simple addition equation.
I read his entire article and as many of the similar minded comments on the FT sight as I could stomach and didn't find one suggestion about solving the REAL problem.
Why is that?
Is even suggesting that overpopulation is the root problem now a violation of the "politically correct" position?

[Organic George]

Green Revolution Redux = More Ag Chemicals and GMO's = Shock Doctrine

Poor countries cannot afford Ag Chemicals so if you follow the Brazil examples you have corporate farming take over huge swaths of ecological sensitive lands and dump poisons into the ecosystem to produce mono crops for export; soy beans & corn for animal feed.

Like micro lending the answer is to teach better farming skills that use renewable resources to help the poor feed themselves.

However to make the biggest impact, STOP the wars and work to reverse climate change.

[Doctor Jay]

When I buy a roast at Safeway, the largest portion of the cost of that roast is transportation costs, not feed costs or slaughtering costs.

Transportation costs are tied to oil costs pretty directly. With the price of oil trending up, I would think that would give local food production a big competitive advantage over agribusinesses on another continent.

[Adams]

Wow, big, big subject.

It reminds me of a book James Fallows wrote about Japan a decade ago. Of course, he lived there for many years, is a sharp observer, and is deservedly among our intellectual elite.

My recollection is that he spent the whole first half (or more) of the book describing how communities thrive even in the most densely populated urban centers, like Tokyo. Real communities, where everyone knows everyone, and their kids. Where people shop for fresh food daily at markets located just down the street, and where they greet the proprietor by name. Where everyone walks, or bikes, unless they take public transportation. Where children grow up in a "village" shepherded by a community of adults with a shared sense of values and "right" behavior, and are seldom out of sight of someone who knows them and their parents.

He also discusses the social statistics with something approaching awe: The incredibly low rates of incarceration, out-of-wedlock pregnancy, delinquency, child abuse, divorce, spousal domestic violence, etc.

Fallows does not minimize the connection between the communities and the statistics.

And yet, astonishingly, in the final chapters he declares that the economically inefficient system of the distribution and sale of products necessary for daily life must be overcome in order for Japan to maximize the advantages of the obvious superiority of their social and cultural organization.

Reminded me of the early Marx of the Economic & Philosophic Manuscript. And I wondered whether Fallows could have read it.

Of course he did. But the commitment of our intellectual elite to (valid, quantitatively well established) concepts like maximizing wealth and production, optimization, comparative advantage and following the science wherever it leads always seems to overcome and obliterate the human dimension. We must destroy a way of life in order to improve the lives of people whose social organization is superior to ours even by our own dreary statistical standards.

The meaning of the family farm, or the family-run small grocery or restaurant or hardware store or production plant to the organization of our daily lives and culture is trivialized and lost.

If the industrial revolution alienated man from the product of his labor (separated him from his hands), the post-industrial revolution, and the information revolution are alienating man from any connection to the material world and from the very ground of his existence (separate him from his mind and spirit). Torture, murder, etc become not merely acceptable again, but banal.

Viewed in this particular way, the effect of the academic social sciences is unconsciously to rationalize and legitimatize the dehumanization of man. For the thinking class.

Collier's piece is an especially juicy example. Perhaps this is progress.

[anne]

Brilliant comments.