Farming systems, food security, farm policy: triple jump through history Niek Koning Agricultural Economics and Rural Policy

Topics 1. What is agriculture? 2. Agriculture and population growth 3. Agriculture, commerce, and the Industrial Revolution 4. The turn to government intervention

1. What is agriculture?

Agriculture is based on cultivation of plants on the thin layer of biologically-transformed weathered rocks that we call soil Consequences: Total farm production is bound to a biophysical potential that is determined by available land, water and sunlight Technical control of production and its organisation as a continuous process are more difficult than in industry Production without sufficient fertilisation and conservation leads to soil degradation

2. Agricultural and population growth

How population could grow while avoiding soil degradation (Europe)

Ricardian constraint Agricultural intensification involved shifts in techniques and technological progress Yet at each moment, agricultural growth involved rising costs per unit of production So population growth increased the scarcity of farm products!

millions Medieval agricultural revolution (fertility concentration on heavy soils) Classical agricultural revolution (fertility concentration on light soils) First modern agricultural revolution (zero fallow) Second modern agricultural revolution (nutrient import) Neolithical revolution (long fallow) Fluctuations in population growth and agricultural intensification in Europe

How to explain the fluctuations in demo- agrarian growth? Predator-prey model (ecology): interaction of slow and fast variables leads to cyclic dynamics However, farmers were learning predators, and agrarian societies were increasingly complex

millions g silver/ 100 kg Medieval agricultural revolution (fertility concentration on heavy soils) Classical agricultural revolution (fertility concentration on light soils) First modern agricultural revolution (zero fallow) Second modern agricultural revolution (nutrient import) Neolithical revolution (long fallow) Some complications... Rise of large farms Roman villa grain prices

Tentative explanation

3. Agriculture, commerce, and the Industrial Revolution

millions Medieval agricultural revolution (fertility concentration on heavy soils) Classical agricultural revolution (fertility concentration on light soils) First modern agricultural revolution (zero fallow) Second modern agricultural revolution (nutrient import) Neolithical revolution (long fallow) Greece & Rome Italian, Flemish & Hanseatic towns Rise of European world trade system 1st Industrial Revolution Agricultural and commercial revolutions in Europe 2d Industrial Revolution

Effects of non-farm developments before the Second Industrial Revolution Non-farm activities influenced the geography of agricultural revolutions –More intensive farming systems around urban centres than in remote areas

Effects of non-farm developments before the Second Industrial Revolution Non-farm activities influenced the geography of agricultural revolutions Non-farm activities reinforced the existing dynamics of agricultural revolutions –Non-farm development did not break the Ricardian constraint Industrial demand for farm-produced materials reinforced the effect of population growth on agricultural prices in the growth phases Increase in supply hampered by high transport costs and lack of new fertility techniques –Urban unemployment exacerbated the crowding and soil degradation in the smallholders sector during the crises

Effects of non-farm developments before the Second Industrial Revolution Non-farm activities influenced the geography of agricultural revolutions Non-farm activities reinforced the existing dynamics of agricultural revolutions Non-farm activities did not affect the dynamics of farm structures –New techniques did not revolutionise agricultural economies of scale (technical control of farm production remained more difficult than in industry)

Effects of the Second Industrial Revolution (c. 1875) Ricardian constraint was broken –electricity, petro-chemistry and internal combustion led to substitution of minerals for farm-produced materials –transport revolution and industrial fertiliser boosted the increase in supply –effect: recurrent falls in agricultural prices

millions g silver/ 100 kg Medieval agricultural revolution (fertility concentration on heavy soils) Classical agricultural revolution (fertility concentration on light soils) First modern agricultural revolution (zero fallow) Second modern agricultural revolution (nutrient import) Neolithical revolution (long fallow) Fluctuations in population growth and in grain prices in Europe

Effects of the Second Industrial Revolution (c. 1875) Ricardian constraint was broken –electricity, petro-chemistry and internal combustion led to substitution of minerals for farm-produced materials –transport revolution and industrial fertiliser boosted the increase in supply –effect: recurrent falls in agricultural prices Ricardian constraint was broken –electricity, petro-chemistry and internal combustion led to substitution of minerals for farm-produced materials –transport revolution and industrial fertiliser boosted the increase in supply –effect: recurrent falls in agricultural prices Decline in large farms –non-farm activities did not revolutionise agricultural economies of scale (technical control remained difficult) –but low prices and rising wages caused large farms to decline profit squeezed reduced investment in and technical lead of large farms higher wages increased labour price advantage of family farms Ricardian constraint was broken –electricity, petro-chemistry and internal combustion led to substitution of minerals for farm-produced materials –transport revolution and industrial fertiliser boosted the increase in supply –effect: recurrent falls in agricultural prices Decline in large farms –non-farm activities did not revolutionise agricultural economies of scale (technical control remained difficult) –but low prices and rising wages caused large farms to decline profit squeezed reduced investment in and technical lead of large farms higher wages increased labour price advantage of family farms Turn to government intervention

4. The turn to government intervention

Evolution of farm policies (1st modern agricultural revolution): liberalising tendencies in farm policies privatisation of government bodies for agriculture enclosures (= liberal land reform) agricultural trade liberalisation (1846: Corn Law repeal in UK) (1st modern agricultural revolution): liberalising tendencies in farm policies privatisation of government bodies for agriculture enclosures (= liberal land reform) agricultural trade liberalisation (1846: Corn Law repeal in UK) After 1875: (2d industrial revolution): turn to government intervention specialised ministries for agriculture support for farm research and education land reform measures for supporting viable family farms agricultural protection –late 19th century: most countries in Western Europe –from 1930: all western countries

Discussion on protection Economic theory: agriculture could have adjusted in a free market Agricultural productivity in eight European countries, (in wheat units and prices of 1870) Experiences between :

Discussion on protection Economic theory: agriculture could have adjusted in a free market Experiences after 1930: attempts at liberalisation in Denmark and the US in the 1950s failed liberalisation in New Zealand after 1984 had mixed results countries with moderate protection had stronger increase in productivity

Discussion on protection Economic theory: agriculture could have adjusted in a free market In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production  technical treadmill Economic theory: agriculture could have adjusted in a free market In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production  technical treadmill In a free market, a balance between supply and demand was only achieved when the treadmill squeezed its own fuel supply (by causing a profit squeeze that reduced investment) Economic theory: agriculture could have adjusted in a free market In practice, rather than leaving a depressed sector, many farmers adopted innovations to raise production  technical treadmill In a free market, a balance between supply and demand was only achieved when the treadmill squeezed its own fuel supply (by causing a profit squeeze that reduced investment) In this way, the ‘Ricardian constraint’ was replaced with ‘Schultzian oversupply’

Import of government intervention Structural policies remedied weaknesses that family farms had for farm progress Protection secured that family farms retained margins for investment Together, these policies paved the way for a new model of agricultural development based on family farms rather than large farms