Friday, December 16, 2011

Perhaps commercial institutions are needed to improve farming in developing countries


I have been reading The Age of Reform by Richard Hofstadter. He describes a long process of the commercial development of agriculture in the United States. In the early history of the country, pioneers cleared land and started small subsistence farms (of course, there were also plantations in the mid-Atlantic and southern states).

As the urban areas in the nation developed, and as there were more people working in services and manufacturing, markets developed for food and fiber; farmers increasingly were producing for and selling into town and city markets.

Hofstadter suggest that the farmers tended to be anit-scientific. While the Land Grant College Act was passed in 1862 leading to the development of agricultural field stations in the colleges, I would suppose that it took time to establish the agricultural colleges and to develop knowledge appropriate for application in local areas. Hofstadter suggests that it was only after the recovery from the financial panic of 1893 that U.S. farmers entered into a long period of increasingly productive commercial agriculture.

Illinois farm combine and farmer

He outlines a complex process in which bankers made farm loans contingent on improved farming practice, farm productivity, and more businesslike commercial farming. Farm journals helped, as did agricultural extension services conducted by experts graduated from the agricultural colleges. Farmers were encouraged to start keeping books, calculating profits and losses from their "farming businesses". Farm machinery manufacturers also pushed farmers to mechanize, thereby increasing labor efficiency on the farms (and not incidentally, improving sales of farm machinery). Later of course, there was an introduction of commercial distribution of improved seeds and pesticides. Thus there was a combination of educational institutions and businesses providing modern inputs to farmers that helped increase farm productivity and the commercial agriculture needed to provide food and fiber to a large urban population from a relatively small farm population.

An Oklahoma farm operation

I recently read that half the population of China and 70 percent of the population of India live in rural areas. If these countries are to develop (at least in the pattern followed by the United States and Europe), they will see a continuing rapid urbanization and will experience a need the people left farming to produce the food surplus needed to feed the cities, and to develop the food distribution system for that purpose. The need for urbanization and commercial agriculture should be comparably large if Africa is to develop economically in the 21st century.

Perhaps agricultural development too should focus more on the development of private sector approaches, both for the development of the commercial intermediaries and institutions needed to process and move agricultural products to urban markets, and the businesses and commercial institutions needed to produce the inputs that the commercial farmers will need. The development of the educational institutions, the extension services, the agricultural science and technology and other public sector inputs would also be necessary, but perhaps easier to achieve if commercial farming produced a demand for those services.

Hofstadter points out that the owners of commercial farms increasingly felt distanced from the farm laborers; the early alliance between "mechanics" and farmers as people who worked with their hands dissolved. Successful commercial farm owners became a conservative, monied class. They developed political institutions capable of powerful influence on legislation. Indeed, due to eccentricities of the U.S. Constitutional system, the farm lobby was so powerful in the latter part of the 20th century that the United States was more conservative than it might have been. Perhaps with attention to the American history, developing countries will be able to avoid excessive power accumulating to a decreasing number of farm families.

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