Lessons from US Agricultural policies
Manifestos of our political parties share at least one common deficiency: lack of long-term principles of how to tackle national economic issues. The main reason is that leaders have not availed themselves of technocrats and thinkers to work on long-term visions for the development of the country.
In this article, we will look at the history of American agricultural policy as an illustration and example of how those who manage the economy of this country in general, and agriculture in particular should proceed. Those who act haphazardly, get haphazard results.
In the international student edition of Economic Issues & Policy by Jacqueline Murray Brux we read: ” Rural America is a home to a fifth of the nations people keeper of natural amenities and national treasures, and safeguard of a unique part of American culture, tradition and history.”
This was a statement by the US Department of Agriculture headed ” An Enhanced Quality of life for Rural Americans 2005.”
In Malawi, the rural population percentage is much higher. At random, some people give percentage figures ranging from 75 to 80. But what is the national policy about the rural areas of Malawi? The areas do not just contain land for agriculture but also minerals, rivers, lakes and sacred places like Kapirintiya in Dzalanyama Mountain Range.
To a certain extent, agriculture in the United States has the same characteristics as agriculture elsewhere in the world, including Malawi. First, we notice that there are farm products as the source of income experience inelastic demand. As incomes of people in urban centers increases, their demand for agricultural products does not increase proportionately.
Inelastic demand for farm products has two major consequences. During bumper harvests because the demand is a good deal, prices fall and farmer’s incomes fall drastically. We experienced this conundrum in the years the government generously dished out fertilisers to farmers hoping to make farming profitable for them. Actually, many groused and grumbled about the prices which they said were below the costs of their unit production. The big harvest was not being bought adequately, prices were falling and farmers’ incomes were tumbling.
In times of food shortages prices shoot up. This is to the advantage of some farmers but non-farmers cry foul and riot.
Faced with these see-saw movements of prices and farmers’ incomes, since the Great Depression of the early 1930s and President Franklin Roosevelt’s New Deal the objective of the America agricultural policy, has been to raise farmers incomes to the extent they do not lag too much behind industrial incomes. It all began with the 1933 Agricultural Adjustment Act.
To stabilise conditions in agriculture, the American government has adopted the price support programme and the programme of restricting supplies. Both policies are intended to raise prices above the market level.
The price support programme fixes the floor price for agricultural products. This is the minimum below which the product may not be sold. While it gives some amount of satisfaction to farmers, it encourages oversupply .Besides artificially high prices discourage demand.
The restriction on farm production takes the form of withdrawing some land from production and keeping it fallow. Land in rural areas does not have any alternative use to growing crops. Farmers are paid cash for those areas which have been withdrawn from production. The output does not always fall below, farmers usually withdraw less fertile hectares of land and intensively cultivate the fertile ones thereby maintaining the oversupply.
What we learn from this is that though Americans preach the virtues of capitalism and minimum state involvement in the economy, they do not practise laissez faire where agriculture is concerned.
Malawi urgently needs thinkers and planners to come up with a policy framework concerning rural people and rural resources. Vague utterances on the problems of rural areas will not take us far on the road to development.
