Agricultural practices in developing countries
By  Nadia Khawaja

Why are small scale farmers wary of change?

Traditional farming is characterised by small scale or ‘subsistence farms’ operated by families who consume most of the output from the farm.

The word “traditional” means “to do things the way they have usually been done”.

Hence, traditional farming is mostly prevalent in developing countries with weak infrastructures and relatively smaller manufacturing and tertiary sectors.

The average size of the farm is usually very small, “usually only 1 to 3 hectares”. For example in Malawi it is only 4 acres hence the output from farming is very low.

Even if surplus is left from production it is usually stored for “lean seasons” where crop yield is low or sold in the local market for minimal returns. These factors lead to traditional farming being a risk minimising rather than a profit maximising enterprise.

As capital resources are limited there is a “low use of purchased inputs other than labour” and most of the labour force is constituted of the family itself.

Introducing new technology or new practices such as mechanisation could thus potentially increase the risk of farming. Investing in machinery and cutting down on the labour, for instance, would lead to local unemployment and in most cases farmers would not have enough monetary funds available to invest in such equipments, techniques or collateral to borrow capital.

Mechanisation, such as the use of tractors, could be irrational since the size of the holdings is so small that any returns from it will not be able to match the cost of the equipment. Additionally, the opportunity cost of labour is fairly low in traditional farming since farmers are self-employed and workers are not paid fixed wages.

There would be a need for guaranteed or instant success for the farmer to adopt a new technique since loss of production could also mean loss of nutrition/subsistence for the family.

Even if a new method would bring in high profits in the long run, any risk of a loss in the short run would turn the farmer away since it could mean that the family would have to spend money/capital that is not at their immediate disposal.

 In case of failure, a sizable proportion of his/her income would be spent on food which could have previously been generated by the farm.

The crop varieties, power sources, methods for altering soil fertility and certain other factors available to traditional farmers constrain productivity growth. However, many traditional farmers reduce their risks by practicing mixed farming.

The livestock available can be used to provide meat, milk and eggs for the family and it also provides a very low cost means of transportation to the market for semi-subsistence farms, as traditional substitute for machinery/technology.

Many traditional irrigation and harvesting methods also involve the use of livestock. Mixed cropping is a very important element of mixed farming which serves the same purpose as the economic practice of diversification in order to reduce the risk of total loss if demand for a certain crop falls or climatic conditions do not permit a favourable harvest.

A combination of crops is grown and crop rotation is practiced in such a way that certain crops even serve as soil conditioners. This minimises the risk posed by natural factors and many farmers produce crops which are resistant to various weather conditions.

The demand for labour is seasonal and there is underemployment causing the marginal productivity of labour to be low. However, traditional farmers view farming as a means of subsistence for their families and often receive their income through other work.

Income from these enterprises helps offset fluctuations in earnings from agriculture serving as an effective risk management strategy. Introducing a new technique could potentially lead to a misallocation of resources and raise the stakes of risk, which is an unaffordable cost for traditional farmers.

 In traditional farming, efficiency, as measured by equating marginal returns to resources in alternative uses, is often high.

Farmers are already aware of the dangers associated with traditional agriculture, such as unfavourable climate, and have developed ways to evade those threats but the introduction of a new risk with a new technique could produce a double threat.

 Undertaking a new a technique like mechanisation would not only involve investment of capital but it would also create a need for a different type of labour that is trained in operating it, doubling the cost and causing further unemployment.

Short run subsistence or income is very important to the farmer since small peasant farms predominate in most developing countries. The income lost in the transition could make survival for these families impossible, a risk they would be unwilling to take.

Traditional farmers are economically rational. Their technique of choice must guarantee a higher yield but at low cost and low risk factor. Thus they can only undertake a new technique which does not significantly increase their risk since profit maximisation might be desired but it is not their economic goal.
 

September, 2013

Source:  Pakistan Today