Agriculture

Andrew Layman:  PCB CEO

I know nothing about agricultural economics and don’t understand the dynamics of food production and consumer markets.      I hope readers will remember this as they reflect on my thoughts.  The fact that agriculture is in decline in many countries of the world, including our own, defies my understanding.   After all, this is not a declining market.  In fact, there is huge demand for food, especially if one thinks of the millions who are stricken by poverty and badly under-nourished.    Furthermore, food has not become obsolete; there is no substitute for it.    Vitamin supplements and the like do not replace food.    I remember that some years ago, milk surpluses were discarded rather than given to the poor.  I think I’m right in suggesting that there have been other examples of similar market controls.   

Not too long ago, agriculture was at the very heart of many national economies.  It was certainly a great deal more significant in this country’s economy than it is now.    What accounts for the decline, I wonder?    It’s far too simplistic to suggest that land distribution policies are to blame.    I have read with interest that France has suffered a very big decline in farming, and I daresay that this would apply across the European Union as well.   What a great opportunity for Africa!    The French are not eating less, and it is unlikely that the much smaller number of farmers is able to produce  the same quantities of food as the higher number of years past.   From 1955 to 2007, I read, the number of people employed in agriculture in France dropped from 6 million to 1 million.    This I can understand.   It is attributable, in part, at least, to mechanisation and technological advances.    That the number of farms declined from two million in 1960 to around six hundred and seventy-five thousand now is not so easy to fathom.    It becomes even less fathomable if one considers that farming in France alone enjoys a significant subsidy – of about $54 billion a year – from the European Common Agricultural Policy (CAP).    This is a bone of great contention in developing countries whose entry to European markets is virtually denied by the subsidised prices that local farmers are able to charge. 

The fundamental market principles of traditional economics have clearly lost their relevance.    In the modern world, the search for equilibrium has become so unsuccessful that one wonders whether it continues to have any validity as a goal.    Economics was not able to predict, nor adequately explain, the crash of recent years.  While there were precedents, of which we took scant notice perhaps, it might have started a chain of global economic events that will continue to deny the theories of business cycles.    The debt crises in Europe, having followed so hot on the heels of the global depression, may be yet another of the symptoms that point to an economic malaise from which we will not easily recover.  

Local urban farmers in Pietermaritzburg have been encouraged to produce crops.   Promised training by the Department of Agriculture (officially AEARD) has not materialised and some have already thrown in the towel.   Bakkie-loads of produce taken to Durban (the fact that the local municipal market is by-passed is another story altogether) yielded less than the costs of transportation.    Elsewhere in our country, agricultural land fetches higher prices for luxury development – golf courses and the like.    There is no doubt that it makes sense for a landowner to sell at a premium price rather than undertake the rigours and risks of farming.   But it represents a serious disjunction in our world.    Our province, our country and the continent, indeed, have the potential to be the centre of food production for our own consumption and that of other countries where interest in farming has waned.  Yet we do not seem to know how to even begin to tap this potential.   Instead, we are watching it evaporate before our very eyes (consider Zimbabwe, for example).   

Economics was born in agriculture.   Business started with the trade of products cultivated on the land.   It was about supply and demand and it was the tension between these that set the price and the value.   And now?   We value footballers way above food and have sacrificed the land to golf courses or waste.      Our world is threatened by global warming, disease, poverty and famine yet with all our collective resourcefulness we have not found the way to restore agriculture to its pride of economic place. 

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