This write-up begins with a congratulation to Dr Mahabub Hossain for having been elected president of the Society of Agricultural Economists (ASAE). En passant, the ASAE international conference was held at BRAC Center for Development Management (CDM), Savar, from October 15-17, 2014. It was participated by a galaxy of agricultural economists from Asia, Europe and America.
One of the keynote speakers in the conference was Dr Joachim von Braun. A former Director General of the International Food Policy Research Institute (IFPRI), he is now Director at the Center for Development Research (ZEEF) at Bonn. It is worthwhile to mention - even paraphrase - some of his observations which are relevant in the context of Bangladesh where roughly four-fifths of the farms are small (with less than one hectare of operated land), and the average size of holding less than one half of a hectare.
The title of von Braun's paper is: "Small Farms - Large numbers, great diversity, and big role for economic development". At the very outset the speaker contests the conventional wisdom of measuring smallness with land endowment only. The reasons for his reservations are not far to seek. One hectare of irrigated fertile land planted with high-value vegetables and fruits and close to cities could generate more income than say 10 hectares of barren, un-irrigated or desert in hinterland. For most of the smallholders in Brazil (operating 10 ha), agriculture is important only as a secondary source of employment whereas smallholders with 50 ha lean primarily on agriculture as a source of livelihood. Again, the same one hectare may lead to quite divergent outcome if sustainably managed or is highly degraded. There is another important fact that should never take a backseat in mind: small farms are nowhere homogenous; they exhibit special characteristics and play different roles in different regions, and these roles differ in significance at different stages of economic development. "Being small is not only about the land or herd size but also about varied access to markets and natural resources and the degree of commercialisation". Given the important role of small farms in reducing rural poverty, the definition of small farms ideally should be asset and income-based".
The paradigm that "small is beautiful" as they are efficient and more productive than the large ones does not stand up to empirical tests. The inverse relationship between farm size and productivity depends on various factors and locations. In a subsistence economy, smallholders might have an edge over the large ones by virtue of the preponderance of family labour, home consumption, but the spread of infrastructure and closeness to market, dependence on external inputs etc. put the premise of economies of scale at the forefront. Â
Von Braun presents the complex calculus of livelihoods of this group. He argues that historically small farms used mostly local resources and faced local constraints. Now they are being affected by increasingly national and global complex economic change. This leads to shifts in optimality and viability of structure and business priorities of small farms. The changes faced by them are partly local and partly international; they are partly inside and partly outside agriculture. For example, return of labour in small-scale farming is increasingly determined outside agriculture through more integrated labour market, opportunity costs of farm labour, access to ICT shaping farmers' choice of crops and marketing options, rising market value of land owing to non-agricultural demand for land use, agricultural price changes, and domestic policies such as infrastructure and innovation system. All this changes the socio-economic framework of small-scale farming.
According to von Braun, small farmers deserve focused development attention as they play a key role in broader economic transformation. Since small farms are home to a larger proportion of population, the successes of economic transformation need to take their roles into account. Second, small farms are the custodians of sustainable use of natural resources and their protection that is key to productivity. Third, globalisation poses both opportunities and threats to small farms. Fourth, they play a key role in reducing poverty. Most of the poor reside in small farms and what is done to them would be a decisive factor in reducing poverty. There are several ways of escaping poverty by small farms such as commercialisation and technological innovation among small farms, diversification from solely staple to high-value crops such growing more vegetables, and improving access to non-farm jobs on the heels of dynamism in agriculture (pull factors).
By and large, the future of small farms and food security depends on: technological and institutional innovations, trade and reduced market volatility, migration options, improved rural services for education, nutrition and health policy, and strengthening property rights and political voice. National policies must support marketing opportunities to promote income growth for people in poverty. Transport infrastructure and information technology must connect the vast number of small farmers to the opportunities that globalisation offers. This includes public investment in agricultural research providing such sustainable technology.
In bid to divert our attention from traditional ways of looking at agricultural transformation merely by a shift from farm to non-farm sector, the von Braun invokes his innovative observations on the evolving "bioeconomy". The theme is that although agriculture is driven by economic and sociological forces - as historical evidence suggests - agriculture itself is also driving changes in the economy and society. Market value webs dominated by the rising supermarkets with controlled quality standards are raising the transaction costs making it difficult for small farmers to enter these markets. "Market access for small farms could be improved in several ways, such as through collective action and forming producer and marketing associations. Collective action and public-private partnership was also shown to enable small farmers in India to have bigger access to horticulture export markets. Enabling small farmers to have access to contract farming could help them overcoming institutional and infrastructural shortcomings". All these changes seemingly suggest that traditionally, agriculture meant three F's: farms, forests and fish but the future agriculture will entail the whole value chain, including agri-business and retail revolution, also ecosystem services, and linkages to bio-economy, thus: not one value chain but many joint systems of value chains, with a growing importance of biomass and of quality of bio-based products.
The writer is a Professor of Economics at Jahangirnagar University. address:abdulbayes@yahoo.com