Farming and the food crisis

By John Rapley

It was not that long ago that family farms were disappearing everywhere. The world swam in mountains of excess production, which drove commodity prices into the basement. Subsidy programmes in Europe and North America had encouraged farmers in the developed world to overproduce, driving small farms out of business. Back in the 1990s, Alan Greenspan foresaw an age in which banks would take over failing farms, consolidate them, and create massive industrial operations.

What a difference a decade makes. Now, four years after food riots swept the developing world, the planet is grappling with another food-price shock. As a result, the North American family farm, once on the verge of extinction, is staging a comeback.

In the short term, the news is bad. Surging prices on corn and wheat will drive up food costs everywhere, falling most heavily on the planet's poor. We can do little more than adapt, and for many it will be a struggle.

But over the longer term, there could be a silver lining to the cloud. Rising demand for agricultural output will revive farming. Since rural populations are larger in developing countries than in developed ones, this could renew opportunities to raise economic growth rates in many poor countries.

Change in food demand

Whatever the cyclical ebbs and flows of world food prices, there are underlying factors which will support food prices for the foreseeable future. The most obvious driver is the growth of emerging economies, especially China and India. With incomes rising, food demand is changing. Consumers are not only eating more, but augmenting the share of meat in their diet. This, in turn, is lifting demand for feed crops.

In addition, the search for energy independence has led the United States government to encourage the use of ethanol. This drives demand for corn, raising prices across the board. Since global energy demand will only continue to rise, pressure on corn as a source of fuel shows no sign of diminishing.

Finally, although a few years does not yet make a trend, there are reasons to believe that climate change is permanently altering supply conditions in the North American corn and wheat belts. Diminishing levels of precipitation, and draining aquifers, are not only inhibiting output this year; they may affect growing conditions permanently.

In late August, the Stockholm International Water Institute released a study which argued that over the next half-century, global water shortages will grow ever more acute. In the extreme scenario, rising prices may eventually force humanity back towards a vegetarian diet, suggested the report.

High-end foods

So if good land and abundant water are becoming valuable commodities in the 21st century, that should be good news for a country like Jamaica, right? Perhaps. It is true that investment consortia are eagerly buying up arable land where they can find it in order to increase food output, especially in Africa. And in North America, family farms are indeed returning.

But it is another thing to suppose, as many are no doubt tempted to do, that farming can absorb lots of currently unemployed workers. There are certainly new opportunities emerging in farming. But increasingly, small farms will be viable only if they specialise in high-end products that are labour-intensive, or if they enjoy generous government support. That might work for the Japanese, but it won't work in most places.

There has been a quiet revolution in farming in the industrial countries. The American family farm today is no longer a cosy yard with a barn. Increasingly, it is a massive expanse farmed by mechanised means, using computerisation and GPS technology to maximise the efficiency of the land, and minimise demand for labour. It will be difficult for small, traditional farms to compete.

The farmer of the future will need to be highly educated, able to operate a farm as if it were a technology start-up. Any return to the land will, therefore, have to start in our high schools and universities.

John Rapley is a world-affairs expert. Email feedback to columns@gleanerjm.com and rapley.john@gmail.com.