Thursday, July 03, 2008

Big Farming--The Way It Starts

Josh Ruxin writes an op-ed in the Post about Africa's Food Crisis Opportunity--the idea that the food crisis in Africa still presents opportunities for change:
"But subsistence-level farmers who are not reliant on expensive fertilizer or oil-fueled machinery can sell their excess produce at higher prices, which are still less than prices for food that might be trucked or flown in. The resulting boomlet benefits sub-Saharan Africa's small farmers, who cultivate, on average, less than 2 1/2 acres and who can, with appropriate assistance, expand their production to meet increasing demand....

A colleague from Nigeria wrote to me this spring saying that while the cost of fertilizer had increased by 50 percent, the selling price of corn was up by 100 percent. In other words, those productive small farmers who had had access to the increased capital required to obtain fertilizer had doubled their income in a year. "
And this is, in my opinion, how it starts. Someone doubles their income and invests wisely, maybe more land, more fertilizer, better seeds, better equipment. Doesn't go deeply into debt so when prices slump, as they always do, he or she can ride out the storm, pick up some land and be ready to profit by the next rise in prices. Slowly the operation gets bigger, until the farmer makes a mistake, has bad luck, or grows older and less ambitious. As it gets bigger, it tends to specialize. Gradually the farmers get on the "treadmill", as Professor Cochrane called it, the feedback loop of more productivity leading to lower commodity prices and higher land prices, leading to more specialization and more investment, meaning more productivity.

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