This is part two of a three-part post on agriculture economic development. Read part one here.
In the previous post, I explained my experience working in agriculture. In this one, I will talk more generally about the challenges of agriculture economic development in general.
Needless to say, the challenges are great, as I have written about before. And, while I feel the idea of market facilitation has merit and has seen some successes, particularly in cash crops like coffee and cocoa (differentiated from staples, like rice and maize), where the markets are ready to handle any volume that comes from the farmers. But, on balance, I think that the forces affecting agriculture markets are complex and global in nature, and the problems cannot be simplified to a lack of communication between buyers and sellers.
It is true – communication is a major impediment to efficiency in developing world agriculture markets. That is why many companies, like Esoko in Ghana and M-Farm in Kenya – are leveraging the penetration of mobile phones to close the knowledge gap between buyers and sellers. These companies offer subscription-based services that allow farmers to check prices in various markets around the country, preventing them from being ripped off by middlemen. They also allow the juice manufacturers, as an example, to communicate order sizes directly with their farmers. This creates a more efficient system, but does nothing to really address the underlying factors influencing these markets.
First of all, agriculture is truly a global industry. In the United States and other developed nations, agriculture production is highly subsidized, where large industrial farms are actually paid to produce more than they can necessarily sell on the open market. When the government explicitly agrees to purchase the surplus, there is little incentive on the part of the farmers to manage their farms according to market demand. Much of the excess corn in the country is either utilized for biofuels and, to a lesser extent, food aid. What’s more, industrial agriculture farms are able to leverage incredible economies of scale, in the form of mechanization, irrigation, and bulk-buying of inputs. These two factors allow large-scale farms to produce at far lower costs, rendering smallholder farmers – which comprise the bulk of the poor in Africa – uncompetitive in all but the local markets.
I once caught a ride back from a citrus stakeholders’ meeting in the central region of Ghana with a pineapple grower and importer of fruit-fly traps from India that protected mango trees from the insects that decimate the crop. My friend Mark, who worked with Engineers Without Borders Canada, knew them from his work with mango farmers in the Eastern Region, and he finagled a ride back to Accra for us. We were working on three hours of sleep after partying with a group of Canadian journalists and he promptly fell asleep in the back seat, leaving me to carry on the conversation for the two-hour ride.
At one point, I asked him what he thought of organizations like mine and USAID in general. He had a tendency to use me as the embodiment of the aid industry in general, and told me that I was the like the defense lawyer for the criminals. In other words, here I was, trying to improve the competitiveness of the agriculture sector when my government, or, more generally, the entire industrial-agriculture complex, was responsible for creating the problem in the first place. I thought that his characterization, while a bit harsh, had some merit.
In the next post, I will discuss my other criticisms of foreign aid for agricultural development.
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