farming systems, food security, farm policy: triple jump through history niek koning agricultural...
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Farming systems, food security, farm policy: triple jump through history
Niek Koning
Agricultural Economics and Rural Policy
Topics
1. What is agriculture?
2. Agriculture and population growth
3. Agriculture, commerce, and the Industrial Revolution
4. The turn to government intervention
1.What is agriculture?
Agriculture is based on cultivation of plants on the thin layer of biologically-transformed weathered rocks that we call soil
Consequences:• Total farm production is bound to a biophysical potential
that is determined by available land, water and sunlight
• Technical control of production and its organisation as a continuous process are more difficult than in industry
• Production without sufficient fertilisation and conservation leads to soil degradation
2.Agricultural and population growth
How population could grow while avoiding soil degradation (Europe)
Inhabitants / km2
Mode of land management
Techniques
Institutions
1-20 Long fallow Slash-and burn, digging stick, hoe
20-40 Fertility concentration on light soils
Separation of pasture and arable land, night
kraaling, ox-drawn hook plough
40-60 Fertility concentration on heavy soils
Mouldboard plough, new harnesses, horse
traction
60-200 Zero fallow New rotations with fodder crops
200-1000 Nutrient import
Artificial fertiliser & imported fodder
Small scattered villages, stateless societies,
collective non-tradable rights in land, individual
rights in people
Centralised states, individual tradable
rights in land & other non-human inputs
-2000
0
1000
1750
2000
Ricardian constraint
• Agricultural intensification involved shifts in techniques and technological progress
• Yet at each moment, agricultural growth involved rising costs per unit of production
So population growth increased the scarcity of farm products!
100
50
25
millions
200
400
-2000 1000 1750 19501500 18750
Medieval agricultural revolution (fertility concentration on
heavy soils)Classical agricultural revolution (fertility concentration on
light soils)
First modern agricultural revolution
(zero fallow)
Second modern agricultural revolution
(nutrient import)
Neolithical revolution (long fallow)
Fluctuations in population growth and agricultural intensificationin Europe
How to explain the fluctuations in demo-agrarian growth?
• Predator-prey model (ecology): interaction of slow and fast variables leads to cyclic dynamics
• However, farmers were learning predators, and agrarian societies were increasingly complex
100
50
25
millions
200
400
150
g silver/ 100 kg
50
100
-2000 1000 1750 19501500 18750
Medieval agricultural revolution (fertility concentration on
heavy soils)Classical agricultural revolution (fertility concentration on
light soils)
First modern agricultural revolution
(zero fallow)
Second modern agricultural revolution
(nutrient import)
Neolithical revolution (long fallow)
Some complications...
Rise of large farms
Roman villa
grain prices
populationgrowth
pricesmoderately
high large farmerinvestment insustainable
intensification
increase inlarge farms
fragmentation ofsmallholdings
lowwages
Tentative explanation
populationgrowth
pricesskyrocketing
large farmerinvestment insustainable
intensification
increase inlarge farms
fragmentation ofsmallholdings
lowwages
empoverishmentof smallholders
populationgrowth
pricesskyrocketing
large farmerinvestment insustainable
intensification
increase inlarge farms
fragmentation ofsmallholdings
lowwages
empoverishmentof smallholders
soildegradation
conflict
distrust
populationcollapse
pricesskyrocketing
large farmerinvestment insustainable
intensification
increase inlarge farms
fragmentation ofsmallholdings
lowwages
empoverishmentof smallholders
soildegradation
conflict
distrust
populationcollapse
pricescollapse
disinvestment
decline oflarge farms
consolidation ofsmallholdings
highwages
FarmerSociety: simulation 500 years, year 0 = 100
10
100
1000
10000
100000
1000000
0 50 100 150 200 250 300 350 400 450
food price soil fertility population technology
3.Agriculture, commerce, and the Industrial Revolution
100
50
25
millions
200
400
-2000 1000 1750 19501500 18750
Medieval agricultural revolution (fertility concentration on
heavy soils)Classical agricultural revolution (fertility concentration on
light soils)
First modern agricultural revolution
(zero fallow)
Second modern agricultural revolution
(nutrient import)
Neolithical revolution (long fallow)
Greece & Rome
Italian, Flemish & Hanseatic towns
Rise of European
world trade system
1st Industrial Revolution
Agricultural and commercial revolutions in Europe
2d Industrial Revolution
Effects of non-farm developments before the Second Industrial Revolution
• Non-farm activities influenced the geography of agricultural revolutions– More intensive farming systems around urban centres than in remote
areas
Effects of non-farm developments before the Second Industrial Revolution
• Non-farm activities influenced the geography of agricultural revolutions
• Non-farm activities reinforced the existing dynamics of agricultural revolutions– Non-farm development did not break the Ricardian constraint
• Industrial demand for farm-produced materials reinforced the effect of population growth on agricultural prices in the growth phases
• Increase in supply hampered by high transport costs and lack of new fertility techniques
– Urban unemployment exacerbated the crowding and soil degradation in the smallholders sector during the crises
Effects of non-farm developments before the Second Industrial Revolution
• Non-farm activities influenced the geography of agricultural revolutions
• Non-farm activities reinforced the existing dynamics of agricultural revolutions
• Non-farm activities did not affect the dynamics of farm structures– New techniques did not revolutionise agricultural economies of scale
(technical control of farm production remained more difficult than in industry)
Effects of the Second Industrial Revolution (c. 1875)
• Ricardian constraint was broken– electricity, petro-chemistry and internal combustion led to substitution of
minerals for farm-produced materials– transport revolution and industrial fertiliser boosted the increase in
supply– effect: recurrent falls in agricultural prices
100
50
25
millions
200
400
150
g silver/ 100 kg
50
100
-2000 1000 1750 19501500 18750
Medieval agricultural revolution (fertility concentration on
heavy soils)Classical agricultural revolution (fertility concentration on
light soils)
First modern agricultural revolution
(zero fallow)
Second modern agricultural revolution
(nutrient import)
Neolithical revolution (long fallow)
Fluctuations in population growth and in grain prices in Europe
Effects of the Second Industrial Revolution (c. 1875)
• Ricardian constraint was broken– electricity, petro-chemistry and internal combustion led to substitution of
minerals for farm-produced materials– transport revolution and industrial fertiliser boosted the increase in
supply– effect: recurrent falls in agricultural prices
• Ricardian constraint was broken– electricity, petro-chemistry and internal combustion led to substitution of
minerals for farm-produced materials– transport revolution and industrial fertiliser boosted the increase in
supply– effect: recurrent falls in agricultural prices
• Decline in large farms– non-farm activities did not revolutionise agricultural economies of scale
(technical control remained difficult)– but low prices and rising wages caused large farms to decline
• profit squeezed reduced investment in and technical lead of large farms• higher wages increased labour price advantage of family farms
• Ricardian constraint was broken– electricity, petro-chemistry and internal combustion led to substitution of
minerals for farm-produced materials– transport revolution and industrial fertiliser boosted the increase in
supply– effect: recurrent falls in agricultural prices
• Decline in large farms– non-farm activities did not revolutionise agricultural economies of scale
(technical control remained difficult)– but low prices and rising wages caused large farms to decline
• profit squeezed reduced investment in and technical lead of large farms• higher wages increased labour price advantage of family farms
• Turn to government intervention
4.The turn to government intervention
Evolution of farm policies
1750-1875 (1st modern agricultural revolution):
liberalising tendencies in farm policies• privatisation of government bodies for agriculture• enclosures (= liberal land reform)• agricultural trade liberalisation (1846: Corn Law repeal in UK)
1750-1875 (1st modern agricultural revolution):
liberalising tendencies in farm policies• privatisation of government bodies for agriculture• enclosures (= liberal land reform)• agricultural trade liberalisation (1846: Corn Law repeal in UK)
After 1875: (2d industrial revolution):
turn to government intervention• specialised ministries for agriculture• support for farm research and education• land reform measures for supporting viable family farms• agricultural protection
– late 19th century: most countries in Western Europe– from 1930: all western countries
Discussion on protection
• Economic theory: agriculture could have adjusted in a free market
Agricultural productivity in eight European countries, 1870-1910 (in wheat units and prices of 1870)
Experiences between 1875-1930:
Discussion on protection
• Economic theory: agriculture could have adjusted in a free market
Experiences after 1930:
• attempts at liberalisation in Denmark and the US in the 1950s failed
• liberalisation in New Zealand after 1984 had mixed results
• countries with moderate protection had stronger increase in productivity
Discussion on protection
• Economic theory: agriculture could have adjusted in a free market
• In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production technical treadmill
• Economic theory: agriculture could have adjusted in a free market
• In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production technical treadmill
• In a free market, a balance between supply and demand was only achieved when the treadmill squeezed its own fuel supply (by causing a profit squeeze that reduced investment)
• Economic theory: agriculture could have adjusted in a free market
• In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production technical treadmill
• In a free market, a balance between supply and demand was only achieved when the treadmill squeezed its own fuel supply (by causing a profit squeeze that reduced investment)
• In this way, the ‘Ricardian constraint’ was replaced with ‘Schultzian oversupply’
Import of government intervention
• Structural policies remedied weaknesses that family farms had for farm progress
• Protection secured that family farms retained margins for investment
Together, these policies paved the way for a new model of agricultural development based on family farms rather than large farms