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Stabroek News

Oil and farming
published: Thursday | August 23, 2007

John Rapley

Higher oil costs might just be good for farmers. The statement would seem to violate common sense. After all, farmers are consumers of energy just like everyone else. And if their light and fuel bills go up, surely their incomes suffer?

While true, there could be more to it than that. Until recently, farming was an industry which appeared to have little future outside of the capital-intensive, heavily-subsidised producers of Europe, the United States and Canada. Most everywhere else in the planet, farmers' incomes were declining. Millions upon millions of rural folk had, in consequence, been moving to the cities of the planet as farming appeared to promise little future. Faced with this, the anti-globalisation movement called for traditional farming to be protected in order to enable people to stay on the land.

Farming fillip

But recently, it appears that farming has received a fillip from an unlikely source: the rising cost of energy. There are two reasons why expensive oil is good for farming - one direct, the other indirect.

The direct effect is that the high cost of oil has led some countries to search fo sources of energy. Popular among these initiatives, as we here in Jamaica know, has been ethanol. While widely - and quite possibly wrongly - seen as a possible salvation for Jamaican sugar farmers, ethanol has led to a very significant increase in demand for corn in the U.S. This has driven up prices for corn.

Higher corn prices are leading to increases in food prices across the board. Not only are corn prices rising quickly, but U.S. farmers are abandoning other crops to go into corn production. The resulting decline in output has raised prices on other food crops. This has hurt poor people the planet over, as their food bills have begun to rise. But if those poor people happen to be farmers as well, their net gain can be positive.

The indirect effect is that the high price of oil is itself a byproduct of the rise of Asia. Rising incomes in China - and, to a lesser degree, India - have driven up demand for meat products, a typical byproduct of prosperity. Because a pound of meat requires more than a pound of grain for input, demand for grain actually goes up.

New lease on life

So while the rising price of oil in this case is not the cause of rising food prices, it has the same underlying origin. Either way, food-crop farming seems to have found a new lease on life. It is becoming possible for smaller farmers to find a niche once again in an industry that had come to be dominated by large, industrial players - large, industrial players that are increasingly found in developing countries like Brazil.

Nevertheless, that does not mean all is rosy for Jamaican farming, at any rate. Last weekend provided graphic illustration of something we have been warned about for some time; namely, that we have entered a new, long phase of intense hurricane activity. Following Gilbert, Jamaica went sixteen years without being hit by a hurricane. Since then, by my count, we've averaged one a year.

It's not expected to get any better. Maybe not even for another generation. Moreover, the gains in world food prices might not have a direct benefit on farmers whose principal markets are local, not abroad. It may be that if Jamaican farming is to survive and prosper, it will have torevamp itself in a way that makes it more resilient in the face of storms, and better able to take advantage of export markets. Failing that, its future may be uncertain.

John Rapley is a senior lecturer in the Department of Government, University of the West Indies, Mona.

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