#BTColumn – Value of farming

The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

by Peter Webster

“The farmer is the only man in our economy who buys everything at retail, sells everything at wholesale, and pays the freight both ways.” – John. F. Kennedy

“Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field.” – President Dwight D. Eisenhower

“The USA made an error in providing food aid to needy countries. We should have helped them to feed themselves” – George W. Bush

The foregoing pie chart shows the relative size of the three subsectors of agriculture:

1. The Input Supply subsector which involves: Equipment and Services, Fertilisers, Pesticides, Seed and Propagation Materials – amounts to about 15 per cent of the sector;

2. The On-farm Production subsector which involves: Cultivation, Management, Labour, Harvesting and Transport – amounts to about 25 per cent of the sector; and

3. The Ago-industrial subsector which involves: Transport, Handling, Processing, Packaging, Marketing, Distribution and Sales – amounts to about 60 per cent of the sector.

It must also be remembered that the farm gate price of a crop or other product is seldom more than 30 per cent of the market price and that the farmers are price takers who are expected to produce food that the poor can afford which essentially means that they are expected to feed the poor. However, feeding the poor should be the responsibility of the entire society, not just the farmer.

The key here is that without the On Farm subsector none of the other agricultural subsectors would exist except for a small part of the Agro-Industrial subsector which would still be required for imported foods that require foreign exchange generated by other sectors of the economy.

The On-Farm subsector of agriculture therefore has a multiplier effect of more than three times in the economy. This is the reason why a dollar spent in locally produced food has been found to be recycled on average six times in the economy. No other sector of an economy will achieve that level of currency recycling. Tourism for example achieves a currency recycling level of less than three. This is why any support, including subsidies, for the On-Farm subsector of agriculture is justified.

The developed countries have been providing subsidies, amounting to billions of dollars annually for their On-Farm subsector, for more than 100 years.

This is one of the reasons why their economies are more developed and why they appear (a mirage) to be more efficient agricultural producers. Those subsidies unfortunately tend to produce surpluses above the market demand which are not bad until those surpluses are dumped on the World market at less than their real cost of production. It is that greedy act of dumping that has seriously damaged unprotected local farmers not the subsidies.

On the other hand, the economists in our developing countries have been erroneously advocating that developing countries cannot afford to subsidize their farmers. It should be obvious that NO

COUNTRY can afford NOT to subsidize their farmers which will promote farm production, improve food security, minimize food prices for the poor and have a significant multiplier effect on the economy. The importance of these effects will become more obvious as increasing food consumption demand, pressures the food supply.

The Food and Agricultural Organisation of the United Nations has labeled that pressure as the “coming crunch”. Like water in the proverbial sink-hole vortex – round and round we go…