Revolution. Image: Oxfam
Revolution. Image: Oxfam

Day 2: How Institutional Reform Saved Agriculture—and Us!

10 December, 2012 | Future of Agriculture: Online Discussion

In the world of 2050, healthy food is abundant and politicians view a sustainable agricultural system as non-negotiable. Looking back, it’s clear that institutional reform was the key to success in the realms of innovation, production, and consumption.

By John Ambler, Vice-President for Strategy, Oxfam America

It is now 2050. And we all have enough to eat. Globally, we are 9 billion strong. Only twenty percent of us are directly involved in agriculture. Yet I repeat, we all have enough food.

Industrialized countries eliminated the subsidies that once undercut the agricultural exports of poor countries. Land reform spread throughout Latin America, and water reform took off in Asia. Irrigation, which once constituted 70 percent of freshwater use, now consumes less than half. New agronomic practices are taking hold worldwide. The world is eating healthier and more locally. The world's politicians view the sustainability of agriculture as non-negotiable.

Looking back over the last 40 years, clearly technological innovation played a part, but the vast increase in food production has been largely driven by institutional reform.   And the key to institutional reform has been placing citizens and primary producers in central oversight and ownership positions. 

The institutional structure of innovation
Governments are investing significantly more in public sector agricultural research overseen by multi-stakeholder trustee panels. Public agricultural research institutions work with additional accountability since 15 percent of their budgets come from licensing their innovations to farmers. In poor countries, farmer-to-farmer innovation is partially subsidized by government, as are improved agricultural information services.

Private agricultural research is also encouraged, but publically-funded innovations are jealously preserved for the public domain. Local boards, which have a mix of government, farmer, and civil society representation, have a large say in setting the private research agenda. While the benefits from agricultural patents derived from private research accrue to the creators, the state sometimes intervenes for the public good, as it once did for HIV/AIDS medicines. Patents produced from government-funded programs are held in public trust, with the income divided equally between inventors and state agricultural programs.

“Biological or chemical innovations in agriculture are now supervised by FDA-like mechanisms at national and global levels.”

Biological or chemical innovations in agriculture are now supervised by FDA-like mechanisms at national and global levels, which assess their potential impact on human, animal, and environmental health. Special efforts are then taken to inform government and communities on the economic and social implications of such innovations. Major breakthroughs have occurred for crops that grow well under saline conditions and new drought and heat tolerant varieties especially suited for the tropics. Stronger data now show that GMO food crops are often associated with health risks for humans, and therefore are heavily regulated, and are limited primarily to industrial crops.

Investment in innovative water-saving technology is flourishing, incentivized by better valuation of water. Worldwide, water is now acknowledged as an economic good and has a price. Water use efficiency for agriculture is up 50 percent compared to 2012. The state has stepped up in its oversight role and guarantees base flows for ecosystem sustainability. 

Institutional structure of production 
Smallholder farmers now get significantly more attention from government, including cooperative storage facilities to manage stocks, flows, and prices, improved transport links and loan guarantees for agricultural cooperatives. Rich countries have stopped subsidizing food production, leaving market forces to determine agricultural prices. 

Even the poorest of governments have increased their investment in small-scale agriculture by fourfold, primarily through co-investment rather than through full subsidy. Market systems, even in statist countries, are allowed to signal supply and demand. Most countries have disbanded their inept and corrupt ministries of cooperatives, replacing them with wholly farmer-owned "cooperative companies,” which have the same status and legal persona as any corporate entity.

All over Latin America, major land reform has occurred peacefully, with compensation paid to former owners thanks to strengthened regulatory safeguards governing the buying and selling of agricultural land. The beneficiaries, mostly peasants, pay for the land over time at a discounted rate. Land reform has served the triple bottom line: higher productivity, more equitable income distribution, and greater ecological sustainability. 

“Land reform has served the triple bottom line: higher productivity, more equitable income distribution, and greater ecological sustainability.”

Heavily dependent on irrigation, Asia, home to nearly half our population, has accomplished major reform in water management, including revamping its water rights frameworks. Significant water rights have been invested in companies controlled by farmers. Water is a tradable commodity, or economic good, but multi-stakeholder water boards closely supervise transactions and form the first point of adjudication for disputes. 

Even large irrigation systems formerly run by government have been “privatized” and are now managed by farmer-owned cooperative companies or by public utilities. Irrigation engineers work for the companies, not the government, thus increasing incentives to raise productivity, reduce water consumption, increase equity, and tackle waterlogging and salinity issues.

Water cooperatives sell the water they save to other users, including growing urban areas. Proceeds from sales are reinvested in irrigation infrastructure and in research. For its part, governments now focus on issues above the individual irrigation system, especially ecological sustainability and inter-system water distribution.

In many countries, some agricultural extension services have also been privatized, which has provided the incentive for agronomists and extension agents to develop and disseminate products that the farmers want and are actually willing to pay for.

“The long and rancorous debate about the relative efficiency of large-scale mechanized production versus small-scale peasant production is over.”

The long and rancorous debate about the relative efficiency of large-scale mechanized production versus small-scale peasant production is over. We acknowledge that both are necessary. In countries such as the USA, grain production still occurs on large mechanized farms. However, fruits and vegetables, which respond more to higher labour inputs, are increasingly managed by smaller farms.

Many developing countries have benefitted from selective mechanization, such as power tillers and small tractors, but except for these areas with major labor shortages wholesale mechanization has been found to be neither necessary nor advisable. And in some places, such as terraced rice fields, the potential for mechanization remains extremely limited.

The proliferation of advanced agronomic techniques continues. The plant root management techniques that started with the system of rice intensification in Asia have spread to new crops and continents. For many crops, combinations of newer and older agronomic wisdom appear to yield superior results. Restructuring the incentive and ownership frameworks for agricultural research and extension has been instrumental in producing new knowledge appropriate for the smallholder.    

“We use mostly organic solutions for soil enrichment.”

We use mostly organic solutions for soil enrichment. Even soil-rich countries once mistakenly considered soil as inexhaustible. When the nutrients disappeared, treatment relied too heavily on chemical fertilizers. Now, chemical fertilizer consumption is down by 75 percent because of the reduced cost of spreading organic material (largely through new solar and hydrogen-powered transport vehicles), better recycling of organic urban waste, improved crop rotation, and more widespread use of nitrogen-fixing cover crops.

Fisheries and watersheds/forests are now under new management. In the case of the former, international bodies with advanced surveillance equipment monitor fishing fleets in open water to make sure they comply with stricter international fishing quotas, while artisanal fisherfolk have stronger legal rights to coastal fishing as well as the technology to protect them.

Regarding watersheds, the practice of downstream urban areas paying for upstream environmental protection services is now common in selected areas. Cities also pay agricultural producers to use climate-friendly production techniques. New solar and hydrogen-based energy and better battery storage technologies greatly reduce the use of arable land for biofuels.

Institutional structure of consumption
With rising incomes, we faced the severe challenge of high grain prices due to rising demand for grain-fattened meat animals.  We still produce large quantities of grass-fed beef, lamb, and goats, but we have managed to reduce per capita consumption of grain-fed meat through public education, new “grain-meat” taxes, and social programs that emphasize the reduction or elimination of meat in the diet.   

“We have managed to reduce per capita consumption of grain-fed meat through public education, new “grain-meat” taxes, and social programs.”

Politicians around the world have learned that our institutions must be reformed if agriculture is to succeed at producing food, stabilizing the ecosystem, and generating employment. The reform path has not been easy, because it requires continual negotiation and nuanced policies—selective mechanization, appropriate application of artificial fertilizer, judicious GMO use, equitable land reform, improved valuation of water, fairer structure of knowledge creation, and more citizen control over regulation and enforcement. 

New technologies have been adopted if and when these institutions see fit, rather than the institutions being driven by the technology. We all have made special efforts to ensure that poor farmers and women have benefitted from the new structures of ownership and authority. 

Thanks to these changes, the world has arrived at a more meaningful place. Whereas back in 2012 the world relied heavily on the principles of profit, extraction, and comparative advantage, today the driving values of our food system are equity, sustainability, and fair distribution. And it works.

Comments

Is a revolution needed?

Day one started with lively debates on Murphy’s and Nwanze’s essays and appreciation for this timely debate. Today the debate continues - we will be debating whether substantially expanding the social protection and risk management measures that Fan outlines gets us closer to Ambler’s vision of a more equitable, sustainable agriculture system, or must we also reform and restructure patterns of consumption, production, and innovation for agriculture to thrive in the future? 

 

Risk coping mechanism

Yes, expanding the social protection and risk management measures will do the trick but I think reformed and restructured patterns of consumption, production, and innovation for agriculture also needed to be thrived in the future. We can (and should) help farmers mitigate price related risks first by ensuring access to finance. In particular, financing for smallholders can help them invest in productivity-enhancing equipment so they can quickly adjust to low food prices by increasing production. Food safety nets are another important risk coping mechanism. School feeding programmes can keep children from leaving classrooms during a food crisis, and cash transfers may support families during a sudden price increase. We should measures the sufficiency of the national food supply, the risk of supply disruption, national capacity to disseminate food, and research efforts to expand agricultural output. We also work to minimize the risks of volatility of agricultural production, efforts to improve agricultural technology are measured through public expenditure on agricultural R&D as apercentage of agricultural GDP, and lastly, we should address consumption to counterbalance micronutrient deficiencies in food that poor usually eat which is a significant problem in poor countries, like Bangladesh.

government facilitation and appropriate institutional mechani

 Like any other business enterprise; agriculture is subjected to high risks because of the volatile nature of the various factors involved in the production, harvesting and marketing system , Therefore, for many aspects like to providing appropriate incentive, sustainable market, essential support services particularly extensions services and protecting small holders farmers from the  possible crop failures, the strong government facilitation and appropriate institutional mechanism is essential.

Global partnerships

Looking at institutional reform as part of our efforts to ensure that the world produces enough safe and good quality food for a world population of 9 billion people by 2050 is very important. As John Ambler argues the vast needed increase in food production should be driven by institutional reform in order to place citizens and primary producers in central oversight and ownership positions.

 

What is important to us is that we support to create an institutional enabling environment that ensures that farmers should be able to make a sustainable living from their business and demand and supply are properly connected. In order to have proper functioning markets all partners along the value chain should unite and decide which is the best sustainable way of working. Local circumstances will be leading what type of production will have best results. Economic development is needed in many developing countries in order to eradicate poverty and hunger throughout the world. This should be supported as John Amblers shows us by proper governmental action and support. The Dutch approach, the so-called golden triangle, of bringing together private companies, government and knowledge institutions has been a pillar under our agricultural productivity growth and we believe this can also be of great value to other countries. The Netherlands has very promising experiences with this concept.

 

 

In order to eradicate the present poverty and food insecurity we agree that there is an urgent need to reform and restructure patterns of consumption, production, and innovation for agriculture. Governments have an important role to play when it comes to changing consumption habits that are a risk for global food security, uplifting smallholders out of poverty and boosting research and innovation in the light of sustainable agriculture. We would like to add a dimension to this institutional landscape which is cooperation between the public and the private sector. We stress the importance and responsibility of other players in the field of food security. They need to be in the picture as well. The most effective way is to build partnerships between governments, civil society, research institutes and the private sector along the supply chain. Cooperation will facilitate the much needed transfer of specific knowledge, experiences, capacities and supply chain strategies that have one specific goal: the increase of sustainable agricultural production and eradication of poverty. It is our experience that including all stakeholders brings added value which is needed to come up with solutions for the long term.

 

Marcel Beukeboom,
Head of Food Security and Financial Sector, Netherlands Ministry of Foreign Affairs

 

Marcel Vernooij,

Head of Food Security and Agrocommodities, Netherlands Ministry of Economic Affairs

We need human transformation

So much noise is made about the need for institutional reforms as panacea for agricultural improvement in developing countries. If developing countries should record any significant improvement in agriculture, then reforms should go beyond institutions and start with the attitude of persons charged with the statutory responsibility of managing agriculture in developing countries. The transformation must encompass both humans and institutions.

Yes we can

I have read carefully todays' essay. I have been become more convinced that a better future is possible. As the author of yesterday's essay mentionned the practices are known. the ressources are here. We only need to create a general awareness of our political leaders and everyone else to start acting now to get the futur that we want. We can do it .

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