Every community is entitled to food sovereignty

Debates about European agricultural policy or Dutch environmental policy regularly lead to discussions about our relationship with developing countries. Do we have to provide them with food through our exports and is this in danger of being jeopardized by new policies? Or can they produce more there themselves?

So that's a good reason to pull out a piece of work by Theodore W. Schulz, an agricultural economist who won the Nobel Prize in 1979. He headed the famous economics department at the University of Chicago for many years. In 1965 he published the booklet "Economic crises in world agriculture" for the wider public. Crisis in the plural, in other words, because food production was not only bad in Russia and China, but Schulz also saw serious problems in developing countries such as India and in the United States (and Western Europe). It was the middle of the Cold War and the Americans tried to win the world over both through food aid and through sending agricultural extension officers. Schulz was extremely critical of it.

Not better under price ratio
He explained that it is very difficult to improve on the age-old agricultural systems in, for example, India. Those farmers there were not stupid, lazy or retarded, words easily used by some at the time to refer to the low production per hectare. According to Schulz, they were simply income- and profit-oriented entrepreneurs. It just couldn't get any better under the existing price ratios, no matter how low the kg yields were. The system had crystallized over time and is now in equilibrium and there were no investment options. Saving didn't make much sense, because adding another water source or adding a buffalo will cost more than it would bring in. Or as economists say, allocative efficiency cannot be improved by changing the mix of production factors. If you want that system to produce more, it must above all have to do with better yield prices, new varieties or cheaper fertilizer. And those better prices weren't there as long as the Americans dumped their surpluses on the world market.

Schulz contrasted this traditional model of agriculture with the modern agriculture of North America and Western Europe. There was still a lot to improve in that system, it was far from being in balance. There were profitable investment options to replace even more labor with machines and there was overproduction (at least in the US, only later in Europe) that had to be eliminated with subsidies. In addition, incomes in the agricultural sector were relatively low compared to the rest of society, in contrast to India where everyone was poor. Schulz therefore advocated improving social services for the agricultural sector, a remarkable voice from the liberal bastion of Chicago for the Republican Midwest.

Huge progress in food production
The booklet - smoothly written in barely 100 pages - is not Schulz's best-known work, but it still makes you think. Many countries in the world have now made enormous progress with food production. Famine is usually caused by war and the associated logistical problems. But poverty is still dire in many places and development is needed. Schulz teaches us that price ratios are essential in that process. The concept of food sovereignty has now also been devised for this purpose, which means that communities should have the right to grow their own food and thus also (temporarily) protect the sector. As we have done in the Common Agricultural Policy. Trade is then also necessary, because harvests fluctuate and specialization is good for prosperity.

For the current debate in Europe, this means, in my opinion, that exports should primarily concern high-quality products such as starting material and clinical nutrition. Production should not be at the expense of our biodiversity and climate challenge, and not at the expense of agricultural development in third countries. But that rule is of course not in everyone's interest.

Krijn J. Poppe

Krijn Poppe worked for almost 40 years as an economist at LEI and Wageningen UR and now holds a number of advisory and management positions. For Boerenbusiness he dives into his bookcase and discusses current developments on the basis of studies that have become classic.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.