It is a thanksgiving time. Who else deserves a greater thanks than the farmers who feed the ever-growing world population of 7.5 + billion people. In fact, the thanksgiving festivities began in the United States as a gesture to thank the Native-American peasants who shared their lands and crops with the new immigrant settlers. At the outset, let me start this article with the ancient Tamil poems which extolled the virtues of farming.
"They alone lead a life who live by farming; the rest of all follow a subservient existence". (Sage Valluvar - Thirukural)
"Farmers form the linch-pin of the world, for they support all the rest who cannot till the soil". (Sage Valluvar – Thirukural)
Such acclamation was quite apt then; yet now more relevant than ever. Despite the critical nature of this sector for the mankind, agriculture is now facing serious doldrums across the world. Ever since the industrial age began, farmers had become an easy target for sarcasm, scold, and sacrifice. Farming sector in general had become forfeited, forgotten, and frivolous. Philosophers, professors, pandits and politicians are alike when it comes to blaming the farm sector for all the social evils or brandishing programs & policies that would squeeze out any savings that would accrue to farmers. For many a self-styled economist, any support to farming is a drain on the economy. It has become almost a fashion to find fault with farmers for all economic malaise. For all said and done; For all theories of economics espoused and practiced; Whether in America, Asia or Africa, the Farming is unhealthy and Farmers are in poverty. The data presented here will speak for themselves. For the sake of quick comparison, some data from the industrialized United States (where the average farm size is around 200 acres) and an emerging economy- India (where the average farm size is less than 25 acres) presented in this article.
It is apparent why farming sector experienced more turmoil than any other business or industry throughout the history in any society. Farming is synonymous with "being human", and it is the oldest industry forming the core of human civilizations from time immemorial until the dawn of the industrial revolution. Without the tax revenues and grain collections from the farmers no great civilization that flourished to tell the story of human accomplishments would have come about. Whether large or small, throughout history farm owners wielded great influence on Monarchs by creating the base for the aristocracy and the core of military organizations. No wonder, the power base engendered by the farming sector became the cause of consternation as well as a conduit for political control, especially - whenever a nation-state experienced the anxiety of expansion or the depression of destabilization resulting from wars, invasions, coups, and the civil unrest.
Although traditional peasantry organizational structure helped the farmers to accumulate some wealth, except for the large-scale land-owners, agriculture in general was not a profitable enterprise throughout the medieval times. With the advent of industrial age, however - due to mechanization, use of fertilizers, modern transportation, storage, and large-scale irrigation - the crop productivity increased several-fold, loss and wastage reduced greatly, seasonal fluctuations in both demand and supply were effectively managed and thus farming turned into a lucrative affair. However, the profitable growth of farming did not last for a long-time. Although colonial trade opened the markets for agricultural commodities throughout the world and enabled the farmers to bring new crops and farming techniques from distant lands, the surplus production and competition for foreign markets resulted in colonial wars and political revolutions destabilizing the life on the countryside in many countries across the world.
Ever since the farming turned into a commercial enterprising activity with the rise of corporate farming, now the farmers have to compete with other industries driven by enormous growth and modern technologies. Farming was no match for industries such as automobiles, steel, oil and textiles for attracting investments, sustaining consumer spending, or retaining manpower. With little room to differentiate their produce, under heavy competition induced by surplus supply and commoditization, irrespective of the critical nature of the farm output, farmers could never get the right prices for their crops.
Although modern technologies, state-of-art trading methods, and globalization has sustained the growth and productivity, agriculture in general has not been a profitable industry except for large scale corporate Agri-businesses that are tied to food processing and biotech firms with their differentiated or branded food products. In the heavily industrialized western world, now agriculture accounts for less than 10% of GDP and 5% of employment. (See the above data charts for certain critical trends reflecting declining farm income in the United States).
Despite the average farm size in the western world is still healthier at about 200 acres per family-farm, for past five decades, the agriculture is on a steady decline due to lack of incentives with the ever-falling unsustainable crop prices, uncertain weather conditions, reduction in subsidies, loss and bankruptcies, and not being able to attract or retain the man power. Moreover, now the Agri-sector faces the brunt of international trade wars and disputes because of the small margins, surplus production capacity, and the dependence on the global markets for their revenue streams. Traditional farming families are leaving the lands in hordes. The number of farm bankruptcies in the United States for example is on a steady rise year after year for past few decades.
On the Eastern side of the world, agriculture has been on a serious trouble for past 3 centuries. Due to colonial taxation, famines of catastrophic proportion, wars and wanton destruction of cultivable lands and neglect of irrigation infrastructure, agriculture in many Asian countries has not been an attractive enterprise for past few centuries. With no financial incentives, lacking modernization, and dilapidated irrigation infrastructure, farming was not a happy profession. Although land redistribution, crop-insurance, and modernization programs envisaged by the post-colonial democratic governments have helped increase the agricultural productivity and food supply enormously, farming has not been financially attractive in these nations. Although still farming accounts for 30 to 50% of the GDP of many eastern nations, it is still a traditional family affair. The role of corporate sector is practically none. (Following are charts depicting some trends in Indian Agriculture economy).
Due to property divisions among siblings the generation after generation, the average farm size in many Asian countries is less than 25 acres which is practically financially unsustainable without modernization, new irrigation and
energy infrastructure, and subsides and state support for better crop prices. Debt ridden farmers committing suicide is a common tragedy routinely reported in many eastern-bloc Agri-dominant economies. With the advent of
liberalization and globalization, governments slashing subsidies, loans, and support prices for crops, and economic institutions and ministries subscribing to free-market capital efficiency theory ideals have forced the already dying agriculture to compete with the exponentially growing mighty industries and trade sectors. Small farmers stand no chance in this economic environment - with no other option other than leaving the rural areas to big cities in search of new livelihoods. Such a sorry state of affairs is not only weakening the financial well-being of a large population base, but also has become a perennial source of political and economic instability affecting the growth of other potential industrial sectors.
The data trends tell the obvious story. Farming is in distress. Farmers are in sadness and farm workers are suffering. Money supply and cash inflow to agricultural sector has declined. Obviously, this is one major factor undoubtedly that has stunted the growth of economies in both the developed world and emerging nations. Whatever the economic logic one would attribute to the current policies of both the developing economies and industrialized nations, without enough farm output, food supply for the rest cannot be sustained which can dramatically impact every nation irrespective of the state of economic life- cycle or the stage of growth a nation is in. It is quite apparent that everyone will be in trouble sooner or later, if the agricultural crisis is not amicably solved at both global and national level. Given the interdependence of economies, decline in the farm employment and Agricultural GDP, world economy and international relations can experience uncertainty and destabilization. Farm sector should be freed from both the frenzy of free markets and the frozen state machinery. Farmers should neither be subject to the torment of state controls nor be thrashed by mean market competition.
Some humble suggestions and observations. On the positive side, keeping the farm sector surplus oriented and making farmers happier will help boost the economic growth in several other sectors. Surplus money flow and savings are not going to make farmers into billionaires; rather will keep the sector incentivized to sustain the agri-output and productivity and flood the markets with produce to keep the prices affordable for the majority. Keeping the farm workers healthier through investments in their healthcare and quality of life will reduce the cost of farm produce. Surplus and safety-nets in agriculture would enable the farmers to withstand the fluctuations in farm prices and sustain the losses due to crop failures or other climate uncertainties. Farm surplus and agricultural profitability will attract younger generation toward farm lands and agricultural employment. Investments and modernization will naturally entail nourishing crops and healthy people. A renaissance in agriculture will occur with the combination of traditional wisdom of farming families and modern science from Universities.
The money supplied to agrarian economy in the form of loans, subsidies, price support, irrigation & infrastructure development or any "tacit Keynesian programs absorbing the cost of pension funds, healthcare, and basic necessities" will not only grow the agrarian economy and retain employment in rural areas, such moneys will always flow back into the treasuries of banks, insurance companies, oil and energy companies, and the construction industry. Most important of all, the healthy rural economy will reduce the population growth in cities grown unsustainable and would bring people back to their native communities equipped with modern education, good health-care, and the state-of-art technology.
References: 1) U.S. Farm Income Outlook for 2019, Congressional Research Service, https://crsreports.congress.gov R45697 (April 16, 2019)
2) Center for Monitoring Indian Economy Reports.