Agricultural Policies: New Developments : New Developments [1 ed.] 9781619426108, 9781612096308

Citation preview

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

AGRICULTURE ISSUES AND POLICIES

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

AGRICULTURAL POLICIES: NEW DEVELOPMENTS

No part of this digital document may be reproduced, stored in a retrieval system or transmitted in any form or by any means. The publisher has taken reasonable care in the preparation of this digital document, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained herein. This digital document is sold with the clear understanding that the publisher is not engaged in rendering legal, medical or any other professional services.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

AGRICULTURE ISSUES AND POLICIES Additional books in this series can be found on Nova‘s website under the Series tab.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Additional E-books in this series can be found on Nova‘s website under the E-books tab.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

AGRICULTURE ISSUES AND POLICIES

AGRICULTURAL POLICIES: NEW DEVELOPMENTS

LAURA M. CONTRERAS

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

EDITOR

Nova Science Publishers, Inc. New York Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers‘ use of, or reliance upon, this material. Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. Additional color graphics may be available in the e-book version of this book.

Library of Congress Cataloging-in-Publication Data Agricultural policies : new developments / editor: Laura M. Contreras. p. cm. Includes index. ISBN 978-1-61942-610-8 (eBook) 1. Agriculture and state. I. Contreras, Laura M. HD1415.A3166 2011 338.1'8--dc22 2010054075

† New York Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

CONTENTS Preface Chapter 1

Agriculture Policy in Sudan Abdeen Mustafa Omer

Chapter 2

Efficiency of Economic Organizations and Public Policy Interventions in Agriculture Hrabrin Bachev

Chapter 3

Chapter 4 Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

vii

Chapter 5

Chapter 6

Chapter 7

Chapter 8

An Environmental Impact Assessment of Biofuel Feedstock Production on Agro-Ecosystem Biodiversity in Canada J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins and H. L. Andrachuk

1

55

87

Some Explorations into Zambia‘s Post-Independent Policies for Food Security and Poverty Reduction Richard J. Culas and Munir A. Hanjra

117

‗Gher‘ Farming System of Bangladesh: A Win-Win Strategy for Agricultural Development? Basanta K. Barmon and Sanzidur Rahman

143

The Impact of EU Common Agricultural Policy on Beef Production: A Dynamic Modelling of Producer's Behaviour Isabelle Piot-Lepetit

171

Hear European Union Citizen‘s Opinion on the Common Agricultural Policy: Guidelines for Policy Makers Melania Salazar-Ordóñez, Samir Sayadi and Macario Rodriguez-Entrena Water Supply for Agricultural, Environmental and Urban Uses in California‘s Borderlands Josue Medellin-Azuara, Ali Mirchi and Kaveh Madani

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

187

201

vi Chapter 9

Chapter 10

Contents Agricultural Policies for Rural Development in Europe: The Case of Greece Polixeni Iliopoulou and Panagiotis Stratakis GIS and Participatory Approaches to Develop Resource Maps for Agricultural Policy Tofael Ahamed, MIN Khan, Noguchi Ryozo, and Tomohiro Takigawa

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Index

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

213

243

265

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

PREFACE This new book presents current research in the study of agricultural policy, including agricultural policy in Sudan and Greece; public policies, collection actions, farming and business strategies in agrarian society; biofuel feedstock production on agro-ecosystem biodiversity in Canada; impacts of agricultural policy interventions on maize production and poverty reduction in Zambia; Gher farming system of Bangladesh; EU common agricultural policy on beef production and water supply for agricultural, environmental, and urban uses in California's borderlands. Chapter 1 – Sudan's climatic conditions (mainly the rainy seasons) enable double annual harvests (in July and November) in the southern parts of the country. Most of the agricultural activities are concentrated near the Nile River. The El Gezira irrigation system that is located between the White and the Blue Nile Rivers (both rivers merge to form the Nile River) is the most important agriculture project and, according to some statistics, is also the largest artificially irrigated region in the world. As the irrigation system has been put in place, sorghum, wheat, and groundnuts have been planted instead of cotton in an effort to make Sudan self-sufficient in foodstuffs. The agricultural sector is the most important economic sector in Sudan. It created 39 percent of the gross domestic production (GDP), employed about 80 percent of population, and contributed 80 percent of the country's exports in the late 1990s. Cotton is the main agriculture export item, although its export volumes have been decreasing recently. The lack of any marketing or developed market policy is evident. The government has suggested the end of export taxes in order to promote more agriculture products in the future. Other agricultural products include sesame seeds, sorghum, and gum Arabic. Animal husbandry represents a very important part of the national economy, as well. Its production increased during recent years as a result of better veterinary treatment, better credit policy, and higher prices in the market. Fishing is another important sector of the national economy. The average yearly production averages around 33,000 tons, from which sea fish represent about 1,500 tons. Perch is the most important fresh-water fish, which is caught mostly in the Nile River. About one-third of the total area of Africa's largest country is suitable for agricultural development. Abundant rainfall in the south permits both agriculture and grazing grounds for the large herds owned by nomadic tribes. In the north, along the banks of the Nile and other rivers, irrigation farming prevails. Of an estimated 16.9 million hectares (41.8 million acres) of arable landing 1998, about 1.9 million hectares (4.7 million acres) were irrigated. Principal cash crops are cotton, sesame, peanuts, sugarcane, dates, citrus fruits, mangoes, coffee, and tobacco; the principal subsistence crops are sorghum, millet,

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

viii

Laura M. Contreras

wheat, beans, cowpeas, pulses, corn, and barley. Cotton is the principal export crop and an integral part of the country's economy. In 2001, agricultural products accounted for 21.9% of imports and 19.2% of exports; there was an agricultural trade deficit of US$24.5 million. Government regional development schemes have played a decisive part in the economy since the 1920s. The Gezira Scheme, located between the Blue and White Niles near their confluence at Khartoum, is the world's largest under a single management and provides a substantial portion of foreign exchange and government revenue. This storage irrigation project, which covers 840,000 hectares (more than two million acres) but has an additional potential of two million hectares (5 million acres), dates back to 1911 and was put into operation by a British firm. After the expiration of the firm's contract with the Sudanese government in 1950, the land was leased to tenant farmers, who numbered over 100,000 in 1987. They manage the scheme jointly with the government through the Gezira Board. In July 1980, construction began on the 354 km (220-mile) Jonglei Canal, intended to drain the Sudd swamp and channel water from the White Nile to the arid northern Sudan and to Egypt. Built by a French consortium at a projected cost of $260 million and scheduled for completion in 1985, the canal could irrigate up to 243,000 ha (600,000 acres) of Sudanese land. By 1984, however, the project had been halted by SPLA opposition, with less than 100 km (62 mi) to be excavated. In 1992, the public and private agricultural sectors invested heavily in land preparations, pesticides, and related inputs. Agricultural funding for such projects comes from the World Bank, the African Development Bank, and the International Fund for Agricultural Development. However, completion of these projects has been complicated by debtrepayment problems. In spite of efforts to improve Sudan's agricultural resources, famine conditions have existed in southern Sudan since 1986. Inadequate rains, a poor distribution infrastructure, and civil war have hampered relief efforts. Among agricultural products in 1999 were sorghum, 3,045,000 tons; peanuts, 980,000 tons; sesame, 220,000 tons, (the third highest in the world after India and China); and wheat, 168,000 tons. Cotton fibre production in 1999 was 172,000 tons. Production in 1999 also included sugarcane, 5,950,000 tons; millet, 1,499,000 tons; cottonseed, 131,000 tons; tomatoes, 240,000 tons; dates, 176,000 tons; yams, 136,000 tons; and corn, 65,000 tons. Chapter 2 - There has been a fundamental development in theory and understanding of market, private, collective and public organizations in recent years. This paper incorporates achievements of the interdisciplinary New Institutional and Transaction Costs Economics (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences) and suggests a framework for assessing the needs and efficiency of economic organizations and public interventions in agriculture. Our new approach includes: study of farm and other agrarian organizations as a governing rather than production structure; assessment of comparative efficiency of alternative market, contract, internal, and hybrid modes of governance; analysis of level of transaction costs and their institutional (distribution and enforcement of de-facto rights between individuals, groups, organizations), behavioral (agents preferences, ability, bounded rationality, tendency for opportunism, risk aversion, trust), dimensional (frequency, uncertainty, assets specificity, and appropriability of transactions), natural, and technological factors; determination of effective horizontal and vertical boundaries of farms and other agrarian organizations; specification of the economic role of government and the needs for public interventions in agrarian sector; assessment of comparative of alternative forms of

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Preface

ix

public involvement in agrarian sector (partnership, regulation, taxation, assistance, provision, in house organization, fundamental property rights modernization). The paper provides new powerful tools for understanding the agrarian organizations and their efficiency, and for improvement of public policies, collective actions, farming and business strategies, and academic analyses in that important sector of social life. Chapter 3 - While biofuels may off-set some fossil energy use and CO2 emissions, there is a need to determine if biofuel feedstock crops can be produced without threatening biodiversity. Environmental Impact Assessment (EIA) can be an important investigative tool if a broad scope of assessment is set. Most assessments of the biofuel industries focus on CO2 equivalent emissions or energy. Biofuel impacts on biodiversity have proven to be more easily identified than quantified and very difficult to compare with the expected energy balance or carbon footprint. The qualitative nature of EIA allows investigators to look beyond the carbon footprint when determining agro-ecosystem sustainability. The EIA process described in this chapter specifically addressed the impacts on biodiversity in Canada caused by feedstock production for biodiesel, corn ethanol and cellulosic ethanol. Case-study scenarios for these three industries were used to demonstrate the EIA process. The scope of this EIA was the agro-ecological aspects of biofuel feedstock production, particularly land use. Forest biomass and processing facilities were excluded. Although biofuels and the feedstock systems that support them have substantial economic benefits, the EIA process does not equate benefits to negative effects in impact determination. Two environmental assessment methods were selected for this application. In the Reduced Impact Matrix method, row-column intersections identify a wide range of projectenvironment interactions and facilitate the documentation of environmental effects. Although less comprehensive, the Project Environment Diagram method identifies the secondary effects. Both techniques rely on project activity and environmental component lists. This EIA used the habitats that define agro-ecosystems to define the environmental components. These habitats include water bodies, agro-ecological features, farmland and related landscapes, and biological features. Biofuel feedstock crops can have many secondary impacts on agro-ecosystems. The type of secondary effects involved often stem from secondary activities. While these activities reflect farm management and land use decisions that are not directly part of the biofuel project, they are induced as a result of the planned project activities. Because of secondary effects, biofuel feedstock production cannot be assessed in isolation of food- and feed-based agriculture. For the same reason, cellulosic ethanol production could pose as much a risk to biodiversity as canola biodiesel or corn ethanol, particularly on rangeland. Because biodiversity impacts are unlikely to carry the economic or political weight needed to terminate most biofuel projects, mitigation policies are a more practical option than prohibition for protecting agro-ecosystem biodiversity. Chapter 4 - Sub-Saharan Africa is burdened with poverty and food security. Eradication of extreme poverty and hunger is a key Millennium Development Goal. Many African governments have pursued economic reforms and agricultural policy interventions in a quest to accelerate economic growth that contributes to poverty reduction. Taking Zambia as a case example the agricultural policy interventions are examined for the period 1964-2008, to better understand their likely impacts on food security and poverty. The analysis shows that past interventions created perverse incentives for farmers and had mixed effects on enhancing the production of stable foods such as maize. The potential of agriculture to generate a more pro-

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

x

Laura M. Contreras

poor growth process depends on the creation of new market opportunities that benefit the poor the most. The state should encourage private sector activity and investments for addressing infrastructure constraints to improve market access and accelerate more pro-poor growth through renewed investments in agricultural research and extension. Chapter 5 - The present chapter provides a detailed examination of the present status of ‗gher‘ farming system, i.e., an integrated prawn-fish-rice joint culture, which is practiced widely in southwest region of Bangladesh. It is an efficient and diversified farming system that produces a staple food crop (rice and fish) in conjunction with a high value cash crop (prawn) and provides a range of social, economic and environmental benefits. Gher farming is already playing an important role in Bangladesh economy by earning valuable foreign exchange, increasing food production and providing employment opportunities. The system is potentially a win-win agricultural development strategy that positively contributes towards food security as well as promotes livelihoods of farmers associated with this farming system. However, to date, the diffusion of this system remains marginal in other parts of the country. This is because, a number of challenges, including weather (flood, drought and cyclone), prawn diseases, constraints related to prawn marketing, and social conflicts are inhibiting its expansion to other regions of the economy. In light of this comparative analysis of present status, we judge the future prospect of this farming system that can serve as a desirable strategy for agricultural growth and development in Bangladesh. Chapter 6 - When the Common Agricultural Policy (CAP) was originally established in the early 1960s the aim of the policy was to encourage farmers to produce more by offering them subsidies and putting systems in place that would guarantee them a high price for their products. However, by the 1980s this had led to large surpluses of products and calls for reform. As a consequence several reforms and adjustments of the CAP took place in the 1990s, culminating in 1999 with the introduction of the Agenda 2000 reform. This led to the last major reform of the CAP in 2003. The main aspect of the 2003 reform was the replacement of numerous income and production subsidy schemes with the Single Payment Scheme. This meant that payments to farmers were no longer linked to production or the number of animals kept. Instead, a form of basic income support is given to farmers who maintain their land according to agricultural and environmental compliance requirements. Regarding the Common Market Organization of beef and veal, the 2003 reform of the CAP severed the link between headage and payments and replaced it by a single farm payment based on historical entitlements. A system of premiums remains in force, subject to certain conditions, in the form of additional payments to the farmer in order to avoid production abandonment. After a survey of the CAP policy on direct aids and in the beef sector, this chapter develops a microeconomic model for analysing the impact of market prices and premiums on beef production. The modelling framework is dynamic. It takes into account the cattle herd renewal resulting from biological constraints, the heterogeneity of the herd composition and the fact that producers have the choice between keeping an animal in the herd and slaughtering it. It characterizes the parameters that influence beef supply decisions as well as cattle herd management by taking into account time adjustments, price expectations and CAP support instruments. Results show that producers‘ decisions are influenced both by market prices and direct support schemes, but the impact is different depending on the herd composition.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Preface

xi

Chapter 7 - Many voices affirm the Common Agricultural Policy (CAP), the European Union‘s most important policy in budgetary terms, still does not reflect social preferences, making its legitimacy difficult. Thus, two questions emerge in relation to the CAP: Do EU citizens hold such a negative view of this policy? Can this view affect the existing Euroscepticism? To reply to these questions, this paper seeks to implement appropriate analytical measures to analyse social opinion and interest of the CAP, conducting an empirical application in southern Spain. Therefore, a survey has been designed and an ordinal logit as well as a bivariate probit model were estimated, plus a cluster analysis. We conclude citizens have limited knowledge of the CAP and they are critics ofit, so its legitimization is subordinate to enhance information and confer greater simplification and transparency to this policy. Chapter 8 - This chapter explores optimal water supply portfolios for agricultural, environmental, and urban uses in Southern California, US and in BajaCalifornia, Mexico using a hydro-economic modeling approach. Hydro-economic models provide useful insights into water related problems in the borderland of both Californias. Fast growing cities, prominent agriculture and growing concerns for maintaining ecosystem functions characterize competing water uses in these arid regions. In California, water transfers from agricultural uses west of the south coast are limited by current conveyance capacity. Continuing current water imports from up north basins may become more challenging in the future as mandated flows for protecting fish in the Sacramento-San Joaquin Delta will likely limit the aforesaid water imports. Water conservation and augmenting water supply via wastewater reuse or desalination may alleviate possible shortages for cities in California‘s south coast. In the northern BajaCalifornia, Mexico surface water from the Colorado River supplies agricultural water in Mexicali along with most urban water uses in the northern border cities. Water supply for maintaining ecosystems in the Colorado River Delta can be found among existing uses and sources in the region. Increased conveyance capacity from east to west of northern Baja California and augmenting water supply via wastewater reuse are among the most promising alternatives to cope with population growth without compromising recommended environmental water uses for the Colorado River Delta. Enhancements in water conveyance capacity along with conjunctive use in Southern California and northern Baja California appear to be among the promising water management alternatives. Chapter 9 - Greece is traditionally considered to be an agricultural country. In the last decades however, and particularly after Greece joined the European Union in 1981, the role of the agricultural sector in the country‘s economy has decreased. Since the secondary sector has become stagnant, tourism and other tertiary activities gain importance in Greece. Rural development traditionally has been considered synonymous to agricultural development in Greece but also in several European countries. This was the case till the 1980‘s when the urban-rural dichotomy characterized rural space and rural population was identified in terms of employment in agriculture. Since the 1990‘s several studies in the European Union have indicated that rural regions present a great diversity. In fact the transformation of the agricultural sector from subsistence economy to market-oriented economy resulted to different patterns of rural development. Rural regions which possessed good agricultural potential took benefit from international markets, while mountainous regions with poor soils and small land ownership were left behind and experienced depopulation and economic decline.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

xii

Laura M. Contreras

Besides agricultural potential some other factors proved to very significant for rural development. Accessibility to urban centers and to transportation networks is very important for efficient agricultural marketing. In addition non-agricultural activities, such as tourism or small scale manufacturing are considered to contribute significantly to rural development. In such a complex landscape, agricultural policies in order to be efficient have to take into account a variety of factors such as agricultural potential, non-agricultural employment opportunities, accessibility to markets and the international environment. In this chapter, the interplay between Common Agricultural Policy (CAP) and rural development policy in Europe will be presented. Rural areas in Europe and in Greece will be described and typologies of rural areas will be presented identifying groups of regions where different policies should be applied. A critical review of rural development programs in Greece will be presented in the framework of European agricultural and regional development policies. Special emphasis will be given on the role of organic farming which is considered to be an alternative to conventional agricultural practices, while it contributes to sustainable rural development. Chapter 10 – Competent and efficient planning is essential within the framework of agricultural policy and should include stakeholders to achieve sustainable development in agricultural sectors. Geographical Information System (GIS) and Participatory Rural Appraisal (PRA) are improving strategies to include stakeholders in planning and resource mapping to enable sustainable development. This chapter reviews the potential of resource mapping as a policy-making tool for poverty eradication in developing countries. Several issues have been considered, including land use planning, water body management, energy, and farming systems. We demonstrated the need for collaboration between interdisciplinary policy planners to develop and implement agricultural resource management policies. Two case studies for resource survey mapping were conducted in the northern of Sylhet regions of Bangladesh. The resource mapping frameworks using GIS, PRA and Focus Group Discussion (FGD) with local communities and community leaders aimed to develop a combined approach to improve agricultural development. This combined approach of spatial and participatory development was followed to ensure the involvement of target groups and include their voice in the identification of needs and objectives, as well as in the decisionmaking process of methods and strategies to achieve goals.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 1-53

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 1

AGRICULTURE POLICY IN SUDAN Abdeen Mustafa Omer Energy Research Institute (ERI) Nottingham, United Kingdom

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ABSTRACT Sudan's climatic conditions (mainly the rainy seasons) enable double annual harvests (in July and November) in the southern parts of the country. Most of the agricultural activities are concentrated near the Nile River. The El Gezira irrigation system that is located between the White and the Blue Nile Rivers (both rivers merge to form the Nile River) is the most important agriculture project and, according to some statistics, is also the largest artificially irrigated region in the world. As the irrigation system has been put in place, sorghum, wheat, and groundnuts have been planted instead of cotton in an effort to make Sudan self-sufficient in foodstuffs. The agricultural sector is the most important economic sector in Sudan. It created 39 percent of the gross domestic production (GDP), employed about 80 percent of population, and contributed 80 percent of the country's exports in the late 1990s. Cotton is the main agriculture export item, although its export volumes have been decreasing recently. The lack of any marketing or developed market policy is evident. The government has suggested the end of export taxes in order to promote more agriculture products in the future. Other agricultural products include sesame seeds, sorghum, and gum Arabic. Animal husbandry represents a very important part of the national economy, as well. Its production increased during recent years as a result of better veterinary treatment, better credit policy, and higher prices in the market. Fishing is another important sector of the national economy. The average yearly production averages around 33,000 tons, from which sea fish represent about 1,500 tons. Perch is the most important fresh-water fish, which is caught mostly in the Nile River. About one-third of the total area of Africa's largest country is suitable for agricultural development. Abundant rainfall in the south permits both agriculture and grazing grounds for the large herds owned by nomadic tribes. In the north, along the banks of the Nile and other rivers, irrigation farming prevails. Of an estimated 16.9 million hectares (41.8 million acres) of arable landing 1998, about 1.9 million hectares (4.7 million acres) were irrigated. Principal cash crops are cotton, sesame, peanuts, sugarcane, dates, citrus fruits, mangoes, coffee, and tobacco; the principal subsistence crops are sorghum, millet, wheat, beans, cowpeas, pulses, corn, and barley. Cotton is the principal export crop and an

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

2

Abdeen Mustafa Omer

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

integral part of the country's economy. In 2001, agricultural products accounted for 21.9% of imports and 19.2% of exports; there was an agricultural trade deficit of US$24.5 million. Government regional development schemes have played a decisive part in the economy since the 1920s. The Gezira Scheme, located between the Blue and White Niles near their confluence at Khartoum, is the world's largest under a single management and provides a substantial portion of foreign exchange and government revenue. This storage irrigation project, which covers 840,000 hectares (more than two million acres) but has an additional potential of two million hectares (5 million acres), dates back to 1911 and was put into operation by a British firm. After the expiration of the firm's contract with the Sudanese government in 1950, the land was leased to tenant farmers, who numbered over 100,000 in 1987. They manage the scheme jointly with the government through the Gezira Board. In July 1980, construction began on the 354 km (220-mile) Jonglei Canal, intended to drain the Sudd swamp and channel water from the White Nile to the arid northern Sudan and to Egypt. Built by a French consortium at a projected cost of $260 million and scheduled for completion in 1985, the canal could irrigate up to 243,000 ha (600,000 acres) of Sudanese land. By 1984, however, the project had been halted by SPLA opposition, with less than 100 km (62 mi) to be excavated. In 1992, the public and private agricultural sectors invested heavily in land preparations, pesticides, and related inputs. Agricultural funding for such projects comes from the World Bank, the African Development Bank, and the International Fund for Agricultural Development. However, completion of these projects has been complicated by debt-repayment problems. In spite of efforts to improve Sudan's agricultural resources, famine conditions have existed in southern Sudan since 1986. Inadequate rains, a poor distribution infrastructure, and civil war have hampered relief efforts. Among agricultural products in 1999 were sorghum, 3,045,000 tons; peanuts, 980,000 tons; sesame, 220,000 tons, (the third highest in the world after India and China); and wheat, 168,000 tons. Cotton fibre production in 1999 was 172,000 tons. Production in 1999 also included sugarcane, 5,950,000 tons; millet, 1,499,000 tons; cottonseed, 131,000 tons; tomatoes, 240,000 tons; dates, 176,000 tons; yams, 136,000 tons; and corn, 65,000 tons.

Keywords: Sudan, agriculture, economy, agriculture policies, sustainable development.

1. INTRODUCTION Sudan, like many African countries, consists of numerous ethnic groups. Unlike most states, however, Sudan has two distinct divisions: the north, which is largely Arab and Muslim, and the south, which consists predominantly of black Nilotic peoples, some of whom are members of indigenous faiths and others who are Christians. British policy during the Anglo-Egyptian condominium (1899-1955) intensified the rift because Britain established separate administrations for the two areas and forbade northerners to enter the south. In the 1990s, many southerners continued to fear being ruled by northerners, who lacked familiarity with their beliefs and ethnic traditions and sought to impose northern institutions on them [1]. Given its proximity to Egypt and the centrality of the Nile River that both countries share, it is not surprising that historically Egypt has influenced Sudan significantly especially the northern part of the country. Ancient Kush, located in present-day northern Sudan, was strongly influenced by Egypt for about 1,000 years beginning ca. 2700 B.C. Although the Hyksos kings of Egypt temporarily broke off contact, Kush subsequently was incorporated

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

3

into Egypt's new Kingdom as a province about 1570 B.C., and remained under Egyptian control until about 1100 B.C. In a move that reversed the pattern of Egyptian dominance, a Cushite king conquered Upper Egypt in 730 B.C.; in 590 B.C., however, the Cushite capital was sacked by the Egyptians and the court moved farther south along the Nile to Merowe. By the sixth century A.D., Merowe had broken up into three kingdoms collectively referred to as Nubia. The people of Nubia adopted Christianity and were ministered to largely by Egyptian clergy. The kingdoms reached their peak in the ninth and tenth centuries. Prior to the coming of Islam, the people had contact with the Arabs primarily in the form of trade. Sudan became known as a source of ivory, gold, gems, aromatic gum, and cattle, all products that were transported to markets in Egypt and Arabia regions. Following the Muslim conquest of the area, in 1276 the Mamluk rulers of Egypt gave Nubia to a Muslim overlord. The Nubians themselves converted to Islam only gradually; a majority of them remained Christian until the fifteenth or sixteenth century. During the sixteenth century, the Muslim religious brotherhoods spread through northern Nubia, and the Ottoman Empire exerted its jurisdiction through military leaders whose rule endured for three centuries. In 1820 Muhammad Ali, who ruled Egypt on behalf of the Ottomans, sent 4,000 troops to Sudan to clear the area of Mamluks. The invasion resulted in Ottoman-Egyptian rule of Sudan from 1821 to 1885; the rule was accompanied by the introduction of secular courts and a large bureaucracy. The 1880s saw the rise of the Mahdist movement, consisting of disciples of Muhammad Ahmad Ibn El Sayyed Abd Allah, a Sudanese who proclaimed himself the Mahdi or "guided one," and launched a jihad against the Ottoman rulers. Britain perceived the Mahdists as a threat to stability in the region and sent first Charles George Gordon and then Herbert Kitchener to Sudan to assert British control. The British conquest led to the establishment of the Anglo-Egyptian condominium and, initially, to military rule of Sudan, followed by civilian administration. Britain largely ignored southern Sudan until after World War I, leaving Western missionary societies to establish schools and medical facilities in the area [2]. After World War I, Sudanese nationalism, which favoured either independence or union with Egypt, gathered popular support. Recognising the inevitable, Britain signed a selfdetermination agreement with Sudan in 1952, followed by the Anglo-Egyptian accord in 1953 that set up a three-year transition period to self-government. Sudan proclaimed its independence January 1, 1956. The country had two short-lived civilian coalition governments before a coup in November 1958 brought in a military regime under Ibrahim Abbud and a collective body known as the Supreme Council of the Armed Forces. Abboud‘s government sought to arabise the south and in 1964 expelled all western missionaries. Northern repression of the south led to open civil war in the mid-1960s and the rise of various southern resistance groups, the most powerful of which was the Anya Nya guerrillas, who sought autonomy. Civilian rule returned to Sudan between 1964 and 1969, and political parties reappeared. In the 1965 elections, Muhammad Ahmad Mahjub became prime minister, succeeded in June 1966 by Sayyed Sadiq El Mahdi, a descendant of the Mahdi. In the 1968 elections, no party had a clear majority, and a coalition government took office under Mahjub as prime minister. In May 1969, the Free Officers' Movement led by Jaafar El Nimeiri staged a coup and established the Revolutionary Command Council (RCC). In July 1971, a short-lived procommunist military coup occurred, but Nimeiri quickly regained control, was elected to a six-year term as president, and abolished the RCC. Meanwhile in the south, Joseph Lagu, a

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

4

Abdeen Mustafa Omer

Christian, had united several opposition elements under the Southern Sudan Liberation Movement. In March 1972, the southern resistance movement concluded an agreement with the Nimeiri regime at Addis Ababa, and a cease-fire followed. A Constituent Assembly was created in August 1972 to draft a constitution at a time when the growing opposition to military rule was reflected in strikes and student unrest. Despite this dissent, Nimeiri was reelected for another six-year term in 1977. During the early stages of his new term, Nimeiri worked toward reconciliation with the south. As the south became stronger, however, he considered it a threat to his regime; and in June 1983, after abolishing the Southern Regional Assembly; he re-divided the southern region into its three historic provinces. The Sudanese People's Liberation Movement (SPLM) and the Sudanese People's Liberation Army (SPLA), founded in 1983, opposed this division. They intensified their opposition following the imposition of Muslim Sharia law throughout the country. In early 1985, while Nimeiri was returning from a visit to the United States, a general strike occurred that the government could not quell, followed by a successful military coup led by Lieutenant General Abd El Rahman Siwar El Dhahab. A Transitional Military Council was created, but the government proved incapable of establishing a national political consensus or of dealing with the deteriorating economic situation and the famine threatening southern and western Sudan. In March 1986, in the Koka Dam Declaration, the government and the SPLM called for a Sudan free from "discrimination and disparity" and the repeal of the Sharia. Sadiq El Mahdi formed what proved to be a weak coalition government following the April 1986 elections. An agreement with the SPLM was signed by Sadiq El Mahdi's coalition partners at Addis Ababa in November 1988; the agreement called for a cease-fire and freezing the application of the Sharia. Sadiq El Mahdi's failure to end the civil war in the south or improve the economic and famine situations led to the overthrow of the government at the end of June 1989 by Colonel Omar Hassan Ahmad El Basher. Sudan's economic straits reflected its position as Africa's largest nation geographically, but one possessed of large areas of desert and semi-desert east and west of the Nile and in the south the world's largest swamp, As Sudd, which led to tropical rain forests in the southernmost area. As a result, although the Nile itself with its tributaries -the Blue Nile and the White Nile, which joined at Khartoum- constituted a vital communications link for the country and a source of water for agriculture, the cultivable area of Sudan was somewhat limited. Moreover, in years of drought the agriculturally productive sector declines appreciably, causing the likelihood of severe famine [3]. In accordance with the focal role played by the Nile, about one-third of Sudan's 1990 estimated population of 25 million lived around Khartoum and in El Awsat State. The latter included the rich agricultural region of El Gezira, south of Khartoum between the Blue Nile and the White Nile. Although only one-fifth of the population lived in urban areas, two-thirds of the total population resided within 300 kilometers of Khartoum. About 600 ethnic groups speaking around 400 languages were represented. Arabic was the official language of the country, with English spoken widely in the south. Ethnic statistics for the 1990s were lacking, but in 1983 Arabs constituted about two-fifths of the total population, representing the majority in the north where the next largest group was the Nile Nubians. Much of the remainder of Sudan's population consisted of non-Muslim Nilotic peoples living in southern Sudan or in the hilly areas west of the Blue Nile or near the Ethiopian border. Among the largest of these ethnic groups were the Dinka and the Nuer, followed by the Shilluk. Many of

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

5

these groups migrated with their herds, seeking areas of rainfall, and therefore it was difficult to establish their numbers accurately. In the early 1990s, agriculture and livestock raising provided the major sources of livelihood for about four-fifths of the population. Wherever possible, Nile waters were used for irrigation, and the government has sponsored a number of irrigation projects. Commercial crops such as cotton, peanuts, sugarcane, sorghum, and sesame were grown, and gum Arabic was obtained from trees. Most of these products along with livestock destined primarily for Saudi Arabia also represented Sudan's major exports. Manufacturing concentrated on food-processing enterprises and textiles, as well as some import substitution industries such as cement, chemicals, and fertilisers. Industry, however, contributed less than one-tenth to gross domestic product in the early 1990s, in comparison with agriculture's more than three-tenths contribution. Sudan was among the world's poorest countries according to the World Bank (WB), with an annual per capita income of US$310 in fiscal year (FY), 1991. Several factors accounted for the relative economic insignificance of the industrial sector. Historically, during the colonial period, Britain had discouraged industrialisation, preferring to keep Sudan as a source of raw materials and a market for British manufactured goods. Following independence, a paucity of development programmes as well as better employment opportunities in the Persian Gulf states have contributed to a shortage of skilled workers. In the early 1990s, Sudan also had limited energy sources only small amounts of petroleum in the south between Kordofan State and Bahr El Ghazal State and a few dams producing hydroelectric power. In addition, transportation facilities; were limited; there existed only a sketchy network of railroads and roads, many of the latter being impassable in the rainy season. Inland waterways could also be difficult to use because of low water, cataracts, or swamps. The lack of a good transportation network hindered not only the marketing of produce and consumer goods but also the processing of such minerals as gold, chrome, asbestos, gypsum, mica, and uranium. The lack of capital accumulation also limited financial resources and necessitated funding by the government, which itself had inadequate revenues. Some northern Sudanese hoped that the rise of Islamic banks might result in more capital being invested in private industrial development, especially after the World Bank refused to extend further loans to the country. Sudan's problems with the World Bank occurred initially in 1984. The World Bank cited Sudan's large external debt in June 1992 the debt was about US$15.3 billion, of which approximately two-thirds represented payment arrears and its failure to take steps to restructure its economy as reasons for denying credit. The large debt resulted primarily from the nationalisation of major sectors of the economy in the 1970s and the use of funds borrowed from abroad to finance enterprises with low productivity. The government needed to use its revenues to meet the losses of these enterprises. In addition, the civil war, the prolonged drought, widespread malnutrition, famine, and the hundreds of thousands of refugees further sapped the economy. Not until June 1990 did the government act to reform the economy by instituting a three-year (FY, 1991-93) National Economic Salvation Programme. The programme aimed to reduce the budget deficit, privatise nationalised enterprises, heighten the role of the private sector, and remove controls on prices, profits, and exports. In October 1991, other steps toward economic reform included devaluing the official exchange rate from LSD4.5 to LSD15 (for value of the Sudanese pound) to the United States dollar and reducing subsidies on sugar and petroleum products. In February 1992, in a further

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

6

Abdeen Mustafa Omer

liberalisation of the economy, all price controls were removed and official exchange rates devalued to LSD90 to the United States dollar. Officials hoped that these measures would not cause the inflation rate, which was about 115 percent per year as of March 1992, to worsen. In a further move designed to curb inflation, Sudan instituted a new currency, the Dinar, worth ten Sudanese pounds, in May 1992. Although the World Bank refused to authorise new loans for Sudan, in July 1991 the Bank granted Sudan US$16 million for the Emergency Drought Recovery Project. In addition, in the spring of 1992 Sudan received an agricultural credit of US$42 million from the African Development Bank and some bilateral aid from Iran and Libya. Like the World Bank, the United States and the European Community had suspended loans to Sudan but had provided some humanitarian assistance; the value of United States humanitarian aid in 1991 was estimated to exceed US$150 million. Nevertheless, the drought, the famine, and the massive influx into the north of refugees from the south as a result of the civil war caused the country's already precarious economy to deteriorate further and complicated the government's ability to rule. Since the military coup of June 30, 1989, the constitution had been suspended, political parties banned, and the legislative assembly dissolved. For practical purposes, in mid-1992 Basher made political decisions in his capacity as president or head of state, prime minister, commander in chief, and chairman of the legislative body created by the 1989 coup, the Revolutionary Command Council for National Salvation (RCC-NS). The RCC-NS consisted of fifteen members who had carried out the coup along with Basher. Several members had ties to the National Islamic Front (NIF), the political arm of the Muslim Brotherhood, an Islamist (sometimes seen as fundamentalist) activist group. Although political parties were illegal under the Basher government, the NIF represented the equivalent of a party. The nature of the relationship between Basher and the NIF was not clear. Some well-informed western observers considered Basher to be a tool of the NIF in spreading its Islamist programmes and its strong advocacy of the imposition of the Sharia. Other observers believed that Basher was using the NIF for his own purposes. The leading figure in the NIF was Hassan Abd Allah El Turabi, an Oxford-educated Muslim religious scholar and lawyer, who strongly advocated the spread of Islamism in the Muslim world. As Turabi was ending his tour of the United States and Ottawa in late May in the spring of 1992, he was attacked in Canada by a Sudanese opponent of the NIF and was seriously injured. Whereas by late July Turabi had resumed meetings with government and Islamic officials and speeches to Muslim groups in Khartoum and in London, the effects of his impaired health on the NIF, the RCC-NS, and the political scene were uncertain in mid-August, 1992. In addition to their legislative functions, members of the RCC-NS shared with Basher and members of the Council of Ministers functions traditionally associated with the executive branch, such as heading government ministries. The Council of Ministers included civilians as well as military officers and in practice was subordinate to the RCC-NS. In April 1991, probably in response to growing criticism of its authoritarian rule, the RCC-NS convened a constitutional conference. However, major opposition groups boycotted the conference. As on previous occasions, the principal intractable problem proved to be the inability of Muslims and non-Muslims to agree on the role of Islamic law as the basis of the legal system at both the national and local levels. Another vexing problem historically was the relationship of regional and local governmental bodies to the national government. The Nimeiri regime had created a pyramidal

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

7

structure with councils at various levels. The councils were theoretically elective, but in practice the only legal party at the time, the Sudan Socialist Union, dominated them. In February 1991, the RCC-NS introduced a federal structure, creating nine states that resembled the nine provinces of Sudan's colonial and early independence years. The states were subdivided into provinces and local government areas, with officials at all levels appointed by the RCC-NS. Although the governors of the three southern states were southerners, power laid in the hands of the deputy governors who were Muslim members of the NIF and who controlled finance, trade, and cooperatives. Below them the most important ministerial posts in the southern states also were held by Muslims, including the post of minister of education, culture, youth, guidance, and information. In a further step, in mid-February 1992, Basher announced the formation of an appointed 300-member Transitional National Assembly to include all RCC-NS members, federal cabinet ministers, and state governors. Basher also indicated in March that beginning in May popular conferences based on religious values would be held in the north and in "secure areas" of the south to elect chairmen and members of such conferences. The election process would create a "General mobilisation of all political institutions". Although the agendas for conferences over the succeeding ten-year period would be based on national issues set by the head of state and local issues raised by the governors, the government touted the process as one that would "Fulfill the revolution's promise to hand over full power to the people". The proposed conference committees were somewhat reminiscent of the popular committees established by the Popular Defence Act of October 1989. Initially, these popular committees had the function of overseeing rationing, but their mandated was broadened to include powers such as arresting enemies of the state. The control exerted by the RCC-NS over various parts of the country varied. For example, western Sudan, especially Darfur, enjoyed considerable autonomy, which at times approached anarchy, as a result of the various armed ethnic groups and the refugee population that existed within it. The situation was even more confused in the south, where until 1991 the government had controlled the major centres and the SPLM occupied the smaller towns and rural areas. The government launched a military campaign in 1991-92 that succeeded in recapturing many military posts that had served as SPLM and SPLA strongholds. The government's success resulted in part from the acquisition of substantial military equipment financed by Iran, including weapons and aircraft bought from China. Another reason for the successes of the government forces was the split that occurred in August 1991 within the SPLA between Garang's Torit faction (mainly Dinka from southern El Istiwai) and the Nasir group (mainly Nuer and other non-Dinka from northern El Istiwai). The two groups launched military attacks against each other, thereby not only destroying their common front against the government but also killing numerous civilians. The Nasir group had defected from the main SPLA body and tried unsuccessfully to overthrow John Garang over human rights violations, Garang's authoritarian leadership style, and his favouritism toward his ethnic group, the Dinka. Abortive peace talks with representatives of both groups as well as the government were held in Abuja, Nigeria, in May and early June 1992. In December 1989 former United States president Jimmy Carter had attempted without success to mediate peace talks between the government and the SPLA. The Torit faction sought a secular state and an end to the Sharia; the Nasir group wanted self-determination or independence for southern Sudan. During the talks, both groups agreed to push for self-determination, but when the

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

8

Abdeen Mustafa Omer

government rejected this proposal, they decided instead to discuss Nigeria's power-sharing plan. A major basis of southern dissidence was strong opposition to the imposition of the Sharia-the SPLA had vowed not to lay down its arms until the Sharia was abrogated. The other source of concern was the fear of northern pressures to arabise the education system (the Basher regime had declared Arabic the language of instruction in the south in early 1992), government offices, and society in general. These fears had led to the civil war, which, with a respite between 1972 and 1983, had been ongoing since 1955. The Basher government's needed for assistance in pursuing the war in the south determined to a large degree Sudan's foreign policy in the 1990s. Basher recognised that the measures taken in the south, which outside observers termed human rights abuses, had alienated the west. Historically, the west had been the source of major financial support for Sudan. Furthermore, Sudan's siding with Iraq in the 1991 Persian Gulf War had antagonised Saudi Arabia and Kuwait, principal donors for Sudan's military and economic needs in the preceding several decades. Basher therefore turned to Iran, especially for military aid, and, to a lesser extent, to Libya. Iranian president Ali Akbar Hashemi Rafsanjani visited Sudan in December 1991, accompanied by several cabinet ministers. The visit led to an Iranian promise of military and economic assistance. Details of the reported aid varied, but in July 1992, in addition to the provision of 1 million tons of oil annually for military and civil consumption, aid was thought to include the financing of Sudanese weapons and aircraft purchases from China in the amount of at least US$300 million. Some accounts alleged that 3,000 Iranian soldiers had also arrived in January 1992 to engage in the war in the south and that Iran had been granted use of Port Sudan facilities and permission to establish a communications monitoring station in the area; these reports were not verified as of mid-August 1992. The only other country with which Sudan had close relations in the early 1990s was Libya. Following an economic agreement the two countries signed in July 1990, head of state Muammar El Qadhafi paid an official visit to Khartoum in October. Basher paid a return visit to Libya in November 1991. Libyan officials arrived in Khartoum for talks on unity, primarily economic unity, in January 1992. While the government was cultivating relations with Iran and Libya, the SPLM and SPLA were seeking other sources of aid in Africa. They had lost their major source of support when the government of Mengistu Hailey Miriam in Ethiopia was overthrown in May 1991. The SPLM and SPLA subsequently sought help from Kenya, Uganda, and several other African countries, thereby creating tensions between those nations and the Basher regime. Furthermore, Sudan's relations with Egypt had soured in 1991 as a result of the Basher government's failure to support Egypt's position in the Persian Gulf War. One manifestation of the deteriorating relations occurred in April 1992 when Sudan became involved in a border confrontation with Egypt. The disagreement resulted from an oil concession Sudan had granted to a subsidiary of Canada's International Petroleum Corporation for exploration of a 38,400 square kilometers area onshore and offshore near Halaib on the Red Sea coast, an area also claimed by Egypt. In the matter of determining Sudan's foreign policy as well as domestic policy, the military had played a major role since independence. Initially, the military was seen as being free from specific ethnic or religious identification and thus in a position to accomplish what civilians could not, namely to resolve economic problems and to bring peace to the south. Such hopes proved futile, however. The growing civil war in the south from 1955-72 and

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

9

again from 1983 to the present, as well as the rising strength of the SPLA and the SPLM posed tremendous problems for the military and for the internal security forces. The civil war was extremely costly; according to one Sudanese government estimate, it cost approximately US$1 million per day. Furthermore, it disrupted the economy-Basher stated in February 1992 that the loss of oil revenues alone since 1986 amounted to more than US$6 billion. In addition, based on United States Department of State estimates in late 1991, war had displaced as many as 4.5 million Sudanese. To counter the SPLA, the government armed various non-Arab southern ethnic groups as militias as early as 1985. In addition, in October 1989 the Basher government created a new paramilitary body, the Popular Defence Forces (PDF) to promote the Islamist aims of the government and the NIF. Although the Basher regime prominently featured the PDF's participation in the 1991-92 campaign in the south, informed observers believed their role lacked military significance. In view of the ongoing civil war, internal security was a major concern of the Basher regime, which reportedly had been the object of coup attempts in 1990, 1991, and 1992. In this regard, the government faced problems on several fronts. There was the outright dissidence or rebellion of several southern ethnic groups. There was also the creation in January 1991 of an opposition abroad in the form of a government in exile. This body, called the National Democratic Alliance, was headed by Lieutenant General Fathi Ahmad Ali, formerly commander of the armed forces under Sadiq El Mahdi. There also was increasing opposition in the north on the part of those who favoured a secular state, including professional persons, trade union leaders, and other modernisers. Such persons opposed the application of Islamic Hudud punishments, the growing restrictions on the activities and dress of women, and the increasing authoritarianism of the government as reflected, for example, in the repression of criticism through censorship, imprisonment, and death sentences. On a wider scale, members of the public in the north staged protests in February 1992 against the price increases on staples after price supports were removed [4]. As a result of the repressive measures taken by the government and the actions of armed government militias in the south as well as retaliatory measures of the SPLA forces, the human rights group Africa Watch estimated that at least 500,000 civilian deaths had occurred between 1986 and the end of 1989. The overall number of deaths between 1983 and mid-1992 was far greater, an outcome not only of the civil war, but also of the famine and drought in the late 1980s and early 1990s. In late 1989, the government, which has considered famine relief efforts a political football, ended its cooperation with relief efforts from abroad because it feared such measures were strengthening southern resistance. The pressure of world public opinion, however, obliged Sudan to allow relief efforts to resume in 1990. The United Nations (UN) World Food Programme (WFP) had initiated Operation Lifeline Sudan (OLS) in March 1989, which had delivered more than 110,000 tons of food aid to southern Sudan before it was obliged by renewed hostilities to close down operations in October 1989. OLS II was launched in late March 1990, via the UN and the International Committee of the Red Cross, to bring in food flights via Kenya and Uganda. In the spring of 1990, WFP indicated it was helping 4.2 million people in Sudan: 1.8 million refugees in Khartoum; 1.4 million people in rural areas of the south; 600,000 who had sought refuge in southern towns; and 400,000 in the "transition zone" in Darfur and Kordofan, between the north and the south. In addition to these sources of suffering, the government, beginning in the 1980s, had undertaken campaigns to destroy the Dinka and the Fur and Zaghawa ethnic groups in Darfur.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

10

Abdeen Mustafa Omer

As of 1991 the Basher regime was also using armed militias to undertake depopulation campaigns against the Nuba in southern Kordofan. Moreover, the government had to deal with the return in 1991 of Sudanese citizens who had been working in Iraq and Kuwait; according to estimates of the International Labour Organisation, such persons numbered at least 150,000. Finally, during late November 1991 and early 1992, the government forcibly uprooted more than 400,000 non-Arab southern squatters, who had created shanty towns in the outskirts of Khartoum, and transported them to the desert about fifty kilometers away, creating an international outcry [5]. In summary, in August 1992 the Basher government found itself in a very difficult position. Although the country's economic problems had begun to be addressed, the economic situation remained critical. At the peace negotiations in Abuja, slight progress had been made toward ending the civil war in the south, but the central concerns about imposition of the Sharia and arabisation had not been resolved. Moreover, the regime appeared to be facing growing dissension, not only in the south but from elements in the north as well. These considerations raised serious questions about the stability of the Basher government.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2. AGRICULTURE In the early 1990s, agriculture and livestock raising were the main sources of livelihood in Sudan for about 61 percent of the working population. Agricultural products regularly accounted for about 95 percent of the country's exports. Industry was mostly agriculturally based, accounting for 15 percent of GDP in 1988. The average annual growth of agricultural production declined in the 1980s to 0.8 percent for the period 1980-87, as compared with 2.9 percent for the period 1965-80. Similarly, the sector's total contribution to GDP declined over the years, as the other sectors of the economy expanded. Total sectoral activities, which contributed an estimated 40 percent of GDP in the early 1970s, had fluctuated during the 1980s and represented about 36 percent in 1988. Crop cultivation was divided between a modern, market-oriented sector comprising mechanised, large-scale irrigated and rainfed farming (mainly in central Sudan) and small-scale farming following traditional practices that was carried on in the other parts of the country where rainfall or other water sources were sufficient for cultivation [6]. Large investments continued to be made in the 1980s in mechanised, irrigated, and rainfed cultivation, with their combined areas accounting for roughly two-thirds of Sudan's cultivated land in the late 1980s. The early emphasis on cotton growing on irrigated land had decreased. Although cotton remained the most important crop, peanuts, wheat, and sugarcane had become major crops, and considerable quantities of sesame also were grown. Rainfed mechanised farming continued to produce mostly sorghum, and short-fibre cotton was also grown. Production in both sub-sectors increased the domestic supplies and export potentials. The increase appeared, however, to have been achieved mainly by expanding the cultivated area rather than by increasing productivity. To stimulate productivity, in 1981 the government offered various incentives to cultivators of irrigated land who were almost entirely government tenants. Subsistence cultivators produced sorghum as their staple crop, although in the northerly, rainfed, cultivated areas millet was the principal staple. Subsistence farmers also grew peanuts and sesame.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

11

Livestock raising, pursued throughout Sudan except in the extremely dry areas of the north and the tsetse-fly-infested area in the far south, was almost entirely in the traditional sector. Because livestock raising, provided employment for so many people. Modernisation proposals have been based on improving existing practices and marketing for export, rather than moving toward the modern ranching that requires few workers [7]. Fishing was largely carried out by the traditional sector for subsistence. An unknown number of small operators also used the country's major reservoirs in the more populated central region and the rivers to catch fish for sale locally and in nearby larger urban centres. The few modern fishing ventures, mainly on Lake Nubia and in the Red Sea, were small [8]. The forestry sub-sector comprised both traditional gatherers of firewood and producers of charcoal-the main sources of fuel for homes and some industry in urban areas-and a modern timber and saw-milling industry, the latter government owned. Approximately 21 million cubic meters of wood, mainly for fuel, were cut in 1987. Gum Arabic production in FY, 1986-87 was about 40,000 tons. In the late 1980s, it became in most years the second biggest export after cotton, amounting to about 11 percent of total exports.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.1. Land Use By 1991 only partial surveys of Sudan's land resources had been made, and estimates of the areas included in different land-use categories varied considerably. Figures for potentially arable land ranged from an estimate of 35.9 million hectares made in the mid-1960s to a figure of 84 million hectares published by the Ministry of Agriculture and Natural Resources (MANR) in 1974. Estimates of the amount actually under cultivation varied in the late 1980s, ranging from 7.5 million hectares, including roughly 10 or 11 percent in fallow, to 12.6 million hectares. Substantial variations also existed in land classified as actually used or potentially usable for livestock grazing. The (MANR) and the United Nations Food and Agriculture Organisation (FAO) have classified about 24 million hectares as pastureland. The 1965 estimate of land use classified 101.4 million hectares as grazing land, and in 1975 an International Labour Organisation (ILO) and United Nations Development Programme (UNDP) interagency mission to Sudan estimated the total potential grazing land at between 120 million and 150 million hectares. Forestland estimates also differed greatly, from less than 60 million hectares by staff of the Forestry Administration to about 915 million hectares by the Ministry of Agriculture and Natural Resources and the FAO. Dense stands of trees only covered between 20 million and 24 million hectares of the total forestland. Differences in land classification may have been accounted for by use of some woodland areas for grazing and some traditional grazing lands for raising crops. Given the dearth of rainfall during the 1980s and early 1990s, the ecological damage from mechanised farming, and the steady march of desertification, discrepancies in these statistics had little meaning in 1991. It was generally agreed, however, that in the late 1980s Sudan still had a substantial amount of land suitable for future cropping. The ILO-UNDP mission believed that two-thirds of the potential area for livestock grazing, however, was already in use. In addition to land suitable for cultivation and livestock grazing, Sudan also had about 76 million to 86 million hectares of desert. Additionally, an area of about 2.9 million hectares was covered by swamps

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

12

Abdeen Mustafa Omer

and inland water, and about 280,000 hectares were occupied by urban settlements and other man-made features.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.2. Land Tenure The right to own property, to bequeath it to heirs, and to inherit it was established by the Permanent Constitution of 1973; this right was suspended in 1985. Sudan had long had a system of land registration through which an individual, an enterprise, or the government could establish title to a piece of land. Such registration had been extensive in northern Sudan, especially in El Khartoum, El Awsat, and Ash Shamali provinces. Before 1970 all other land (unregistered) belonged to the state, which held ownership in trust for the people, who had customary rights to it. In 1970 the Unregistered Land Act declared that all waste, forest, and unregistered lands were government land. Before the act's passage, the government had avoided interfering with individual customary rights to unregistered land, and in the late 1980s it again adhered to this policy. The government owned most of the land used by the modern agricultural sector and leased it to tenants (for example, the Gezira Scheme) or to private entrepreneurs, such as most operators of large-scale mechanised rainfed farming. In the late 1980s, however, the great area of land used for pasture and for subsistence cultivation was communally owned under customary land laws that varied somewhat by location but followed a broadly similar pattern. In agricultural communities, the right to cultivate an area of unused land became vested in the individual who cleared it for use. The rights to such land could be passed on to heirs, but ordinarily the land could not be sold or otherwise disposed of. The right was also retained to land left in fallow, although in Bahr El Ghazal, Aali El Nil, and El Istiwai there were communities where another individual could claim such land by clearing it. Among the transhumant communities of the north, the rights to cultivated land were much the same, but the dominant position of livestock in community activities had introduced certain other communal rights that included common rights to grazing land, the right-of-way to water and grazing land, the right to grass on agricultural land unless the occupier cut and stacked it, and the right to crop residues unless similarly treated. In the western savannas, private ownership of stands of Hashab trees could be registered, an exception to the usual government ownership of the forests. But dead wood for domestic fuel and the underlying grass were common property. Water, a matter of greatest importance to stock raisers, was open to all if free standing, but wells that had been dug and the associated drinking troughs were private property and were retained by the digger season after season. In northern Sudan, especially in the western savannah where increasing population and animal numbers have placed pressure on the land, violations of customary laws and conflicts between ethnic groups over land rights have been growing. Resolution of these problems has been attempted by local government agencies but only on a case-by-case basis [9].

2.3. Irrigated Agriculture In 1991, Sudan had a large modern irrigated agriculture sector totalling more than 2 million hectares out of about 84 million hectares that are potentially arable. About 93 percent

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

13

of the irrigated area was the government projects; the remaining 7 percent belonged to private operations. The Nile and its tributaries were the source of water for 93 percent of irrigated agriculture, and of this the Blue Nile accounted for about 67 percent. Gravity flow was the main form of irrigation, but about one-third of the irrigated area was served by pumps [10]. The waters of the Nile in Sudan have been used for centuries for traditional irrigation, taking advantage of the annual Nile flood. Some use of this method still continued in the early 1990s, and the traditional Shaduf (a device to raise water) and waterwheel were also used to lift water to fields in local irrigation projects but were rapidly being replaced by more efficient mechanised pump systems. Among the first efforts to employ irrigation for modern commercial cropping was the use of the floodwaters of the Qash River and the Baraka River (both of which originate in Ethiopia) in eastern Sudan to grow cotton on their deltas. This project was started in the late 1860s by the Egyptian governor and continued until interrupted by the turbulent period of the 1880s, leading to the re-conquest of the country by the British in 1899. Cultivation was resumed in 1896 in the Baraka Delta in the Taker area, but in the Qash Delta it only resumed after World War I. Between 1924 and 1926, canals were built in the latter delta to control the flood; sandstorms made canals unfeasible in the Baraka. Between the 1940s and the 1970s, various projects were developed to irrigate land. In 1982 both deltas yielded only one crop a year, watered by the flood. Adequate groundwater, however, offered the eventual possibility of using pump irrigation from local wells for additional cropping or for supplementing any flood shortages [11]. The drought that affected Sudan in the 1980s was a natural disaster that had a crushing effect on the country's irrigation systems. In 1990-91, for instance, water was so scarce in the Taker area that for the first time in 100 years the crops failed [12]. As of 1990, the country's largest irrigation project had been developed on land between the Blue and White Nile rivers south of their confluence at Khartoum. This area is generally flat with a gentle slope to the north and west, permitting natural gravity irrigation, and its soils are fertile cracking clays well suited to irrigation. The project originated in 1911, when a private British enterprise, Sudan Plantations Syndicate, found cotton suited to the area and embarked on what in the 1920s became the Gezira Scheme, intended principally to furnish cotton to the British textile industry. Backed by a loan from the British government, the syndicate began a dam on the Blue Nile at Sennar in 1913. Work was interrupted by World War I, and the dam was not completed until 1925. The project was limited by a 1929 agreement between Sudan and Egypt that restricted the amount of water Anglo-Egyptian, Sudan could use during the dry season. By 1931 the project had expanded to 450,000 hectares, the maximum that then could be irrigated by the available water, although 10,000 more hectares were added in the 1950s. The project was nationalised in 1950, and was operated by the Sudan Gezira Board as a government enterprise. In 1959, a new agreement with Egypt greatly increased the allotment of water to Sudan, as did the completion in the early 1960s of the Managil Extension on the western side of the Gezira Scheme. By 1990 the Managil Extension had an irrigated area of nearly 400,000 hectares, and with the 460,000 hectares eventually attained by the original Gezira Scheme, the combined projects accounted for half the country's total land under irrigation [13]. In the early 1960s, the government set up a programme to resettle Nubians displaced by Lake Nubia (called Lake Nasser in Egypt), which was formed by the construction of the Aswan High Dam in Egypt. To provide farmland for the Nubians, the government constructed the Khashm El Girba Dam on the Atbara River and established the Halfa El

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

14

Abdeen Mustafa Omer

Gadid (New Halfa) irrigation project. Located west of Kassala, this project was originally designed to irrigate about 164,000 hectares. In 1982, it was the only large irrigation project in the country that did not use the waters of the Blue Nile or White Nile. The resettlement was effected mainly after completion of the Khashm El Girba Dam in 1964. Part of the irrigated area was also assigned to local inhabitants. The main commercial crops initially introduced included cotton, peanuts, and wheat. In 1965, sugarcane was added, and a sugar factory having a design capacity of 60,000 tons was built to process it. The project enabled 200,000 hectares of land to be irrigated for the first time. Heavy silting as well as serious problems of drainage and salinity occurred. As a result, by the late 1970s the reservoir had lost more than 40 percent of its original storage capacity and was unable to meet the project water requirements. These problems persisted in the early 1990s. The multipurpose Roseires Dam was built in 1966 and power-generating facilities were installed in 1971. Both the water and the power were needed to implement the Rahad River irrigation project located east of the Rahad River, a tributary of the Blue Nile. The Rahad entered the Blue Nile downstream from the dam and during the dry season had an insufficient flow for irrigation purposes. Work on the initial 63,000 hectares of the project began in the early 1970s; the first irrigation water was received in 1977, and by 1981 about 80 percent of the prepared area was reported to be irrigated. In May 1988, the World Bank agreed to provide additional funding for this and other irrigation projects. Water for the project was pumped from the Blue Nile, using electric power from the Roseires plant, and was transported by an eighty-kilometers-long canal to the Rahad River (en route under-passing the Dinder River, another Blue Nile tributary). The canal then emptied into the Rahad above a new barrage that diverted the combined flow from the two sources into the project's main irrigation canal. Irrigation was by gravity flow, but instead of flat field flooding, furrow irrigation was used, because it permitted more effective use of machinery. In the 1920s, private irrigation projects using diesel pumps also had begun to appear in El Khartoum Province, mainly along the White Nile, to provide vegetables, fruit, and other foods to the capital area. In 1937 a dam was built by the Anglo-Egyptian condominium upstream from Khartoum on the White Nile at Jebel El Aulia to regulate the supply of water to Egypt during the August to April period of declining flow. Grazing and cultivated land along the river was flooded for almost 300 kilometers. The government thereupon established seven pump irrigation projects, partially financed by Egypt, to provide the area's inhabitants with an alternative to transhumance [14]. This irrigation project eventually proved successful, making possible large surpluses of cotton and sorghum and encouraging private entrepreneurs to undertake new projects. High cotton profits during the Korean War (1950-53) increased private interest along the Blue Nile as well, and by 1958 almost half the country's irrigated cotton was grown under pump irrigation. During the 1960s, however, downward fluctuations in world cotton prices and disputes between entrepreneurs and tenants led to numerous failures of pump irrigation projects. In 1968, the government assumed ownership and operation of the projects. The government established the Agricultural Reform Corporation for this purpose, and the takeover began that year with the larger estates. Subsequently, as leases expired, the corporation acquired smaller projects, until May 1970 when all outstanding leases were revoked. A considerable number of small pump operations that developed on privately owned land, chiefly along the main Nile but also on the Blue Nile, continued to operate.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

15

Since the 1950s, the government has constructed a number of large pump projects, mostly on the Blue Nile. These have included the Junayd project on the right bank of the Blue Nile east of the Gezira Scheme. This project, with an irrigated area of about 36,000 hectares, went into operation in 1955 to provide an alternative livelihood for nomadic pastoralists in the area. It produced cotton until 1960, when about 8,400 hectares were converted to sugarcane. A sugar factory built to process the crop (with a potential capacity of 60,000 tons of sugar a year) opened in 1962. In the early 1970s, the Japanese-assisted El Suki project, also of 36,000 hectares, was established upstream from Sennar to grow cotton, sorghum, and oilseeds. In the mid-1970s, the government constructed a second project near Sennar of about 20,000 hectares. In addition to cotton and other crops such as peanuts, about 8,400 hectares of the area were devoted to raising sugarcane. The cane-processing factory, with a design capacity of 110,000 tons of sugar a year, opened in 1976. Several smaller Blue Nile projects added more than 80,000 additional hectares to Sudan's overall irrigated area during this time [15]. In the 1970s, when the consumption and import of sugar grew rapidly, domestic production became a priority, and two major pump-irrigated sugar plantations were established on the White Nile in the Kosti area. The Hagar Asalaia Sugar Project began in 1975, had an irrigated area of about 7,600 hectares. The sugar factory, completed in 1977, had a potential annual capacity of 110,000 tons. The Kenana Sugar Project, which had almost 16,200 hectares under irrigation in 1981 and had a future potential of over 33,000 hectares, was one of the world's largest sugar milling and refining operations. In 1985-86, production reached more than 330,000 tons a year. This project, first proposed in 1971, was beset with funding problems and overruns that increased overall costs from the equivalent of US$113 million estimated in 1973 to more than US$750 million when the plant opened officially in early 1981. The Kenana Sugar Project, unlike the country's four other government-owned sugar projects, was a joint venture-among the governments of Sudan, Kuwait, and Saudi Arabia, and the Arab Investment Company, the Sudan Development Corporation, Kenana Limited, and the Arab Aid for Agricultural Investment and Development (AAAID), including local Sudanese banks. An initial trial run in the 1979-80 cane seasons produced 20,000 tons of sugar. Yield increased to an estimated 135,000 to 150,000 tons the following season. Production at the Hagar Asalaia factory did not get under way until the 1979-80 seasons because of cane and sugar-processing difficulties. Problems have also affected the other three state sugar factories, but as a result of proposed World Bank management, the output total of these four government operations for the 1984-85 seasons improved to nearly 200,000 tons. Output declined to 159,000 tons in 1985-86 because of the drought. In 1989, sugarcane production reached 400,000 tons [16].

2.4. Rainfed Agriculture Cultivation dependent on rainfall falls into two categories. Most Sudanese farmers always have relied on rainfed farming. In addition to these traditional farmers, a large modern mechanised rainfed agriculture sector has developed since 1944-45, when a government project to cultivate the cracking clays of central Sudan started in the El Gedaref area of Ash Sharqi Province, largely to meet the food needs of army units stationed in the British colonies in eastern Africa (present-day Kenya, Tanzania, and Uganda). An average of about 6,000

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

16

Abdeen Mustafa Omer

hectares a year was cultivated between 1945 and 1953, producing chiefly sorghum, under a sharecropping arrangement between the government and farmers who had been allocated land in the project. These estates proved costly, however, and in 1954 the government began encouraging the private-sector to take up mechanised farming in the area, a policy that continued after Sudan gained independence in 1956. Under the new approach, the government established several state farms to demonstrate production methods and to conduct research. Research activities have been very limited, however, because of staffing and funding problems, and the farms have been operated essentially as regular production units. The private-sector response was positive, and by 1960 mechanised farming had spread into other areas of the cracking clay zone in Ash Sharqi and El Awsat provinces. The government set aside rectangular areas that were divided into plots of 420 hectares (later raised in places to 630 hectares) each. Half of these plots were leased to private farmers, the other half left in fallow. After four years, the originally leased land was to be returned to fallow and the farmer was to receive a new lease to an adjacent fallow area. When the demand for land grew faster than it could be demarcated, areas outside the designated project limits were taken over by private individuals. The four-year lease proved unpopular because it meant new investment in clearing land every four years, and apparently much of the worked land continued to be cultivated while fallow land was also placed under cultivation. By 1968 more than 750,000 hectares were being cultivated, of which it was estimated that more than 200,000 hectares constituted unauthorised holdings. The average agricultural production growth rate declined, however, from 2.9 percent in the period between 1965 and 1980, to 0.8 percent in the period between 1980 and 1987, the latest available figures. Reportedly, for the 1991-92 seasons, the Ministry of Agriculture and Natural Resources planned for about 7.3 million hectares of food crops to be planted, with about 1.6 million hectares planted in the irrigated sector and about 5.7 million hectares in the rain-fed areas [17]. The investment requirements for mechanised farming favoured prosperous cultivators, and eventually most farms came to be operated by entrepreneurs who raised capital through mortgageable property or other assets in the urban centres. Through arrangements with other individuals, these entrepreneurs frequently managed to control additional plots beyond the legal limit of two. Their ability to obtain capital also permitted them to abandon depleted land and to move into newly demarcated uncleared areas, a practice that had a deleterious impact upon the environment, deprived the indigenous inhabitants of work opportunities, and increased desertification. In 1968, to expand the operator base and to introduce more control over land allocation, crops, and farming methods, the government established the Mechanised Farming Corporation (MFC), an autonomous agency under the Ministry of Agriculture and Natural Resources. From 1968 through 1978, the IDA made three loans to the government to enable the MFC to provide technical assistance, credit for land-clearing and machinery, and marketing aid to individual farmers and cooperative groups. The MFC also became the operator of state farms. In the late 1970s, about 2.2 million hectares had been allocated for mechanised farming, and about 420,000 hectares more had been occupied without official demarcation. About 1.9 million hectares in all were believed to be under cultivation in any one season. Of the officially allocated land, more than 70 percent was held by private individuals. Private companies had also begun entering the field, and some allocations had been made to them. State farms accounted for another 7.5 percent. About 15 percent of the total allocated land was in MFC-IDA projects. The largest proportion of mechanised farming was in Ash Sharqi

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

17

Province, 43 percent; the next largest in El Awsat Province, 32 percent; and about 20 percent was in Aali El Nil Province. Mechanised farming had also been initiated in southern Kordofan Province through a project covering small-scale farmers in the area of the Nuba Mountains, but under a different government programme. Proposals also have been made for MFC projects using mechanised equipment in other areas of southern Kordofan (some have already been tried) and southern Darfur provinces. There were serious feasibility problems in view of competition for land and conflicts with traditional farming practices, difficult soil conditions, and the probable negative effect on the large numbers of livestock of nomads. Only a few crops had been found suitable for cultivation in the cracking clay area. Sorghum had been the principal one, and during the early 1980s it was planted on an average of about 80 percent of the sown area. Sesame and short-fibre cotton were also grown successfully but in relatively smaller quantities, sesame on about 15 percent of the land and cotton on about 5 percent. Soil fertility has reportedly been declining because of the continued planting of sorghum and the lack of crop rotation. Yields have apparently decreased, but in view of the area's greatly varying climatic conditions and the uncertain production data, definitive conclusions on trends appeared premature [18].

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.5. Economy The economy of Sudan continued to be in disarray in mid-1991. The principal causes of the disorder have been the violent, costly civil war, an inept government, an influx of refugees from neighbouring countries, as well as internal migration, and a decade of below normal annual rainfall with the concomitant failure of staple food and cash crops. The economic and political upheavals that characterised Sudan in the 1980s have made statistical material either difficult to obtain or unreliable. Prices and wages in the marketplace fluctuated constantly, as did the government's revenue. Consequently, information concerning Sudan's economy tends to be more historical than current [19]. In the 1970s, economic growth had been stimulated by a large influx of capital from Saudi Arabia and Kuwait, invested with the expectation that Sudan would become "the breadbasket" of the Arab world, and by large increments of foreign aid from the United States and the European Community (EC). Predictions of continuing economic growth were sustained by loans from the World Bank and generous contributions from such disparate countries as Norway, Yugoslavia, and China. Sudan's greatest economic resource was its agriculture, to be developed in the vast arable land that either received sufficient rainfall or could be irrigated from the Nile. By 1991 Sudan had not yet claimed its full water share (18.5 billion cubic meters) under the 1959 Nile Waters Agreement between Egypt and Sudan. Sudan's economic future in the 1970s was also energised by the Chevron Overseas Petroleum Corporation's discovery of oil on the borderlands between the provinces of Kordofan and Bahr El Ghazal. Concurrently, the most thoroughly researched hydrological project in the third world, the Jonglei Canal (also seen as Junqali Canal), was proceeding ahead of schedule, planned not only to provide water for northern Sudan and Egypt, but also to improve the life of the Nilotic people of the Canal Zone. New, large agricultural projects had been undertaken in sugar at Kenana and cotton at Rahad. Particularly in southern Sudan, where the Addis Ababa accords of March 27, 1972, had seemingly ended the insurgency, a sense of optimism and prosperity prevailed, dashed, however, when the civil war resumed in

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

18

Abdeen Mustafa Omer

1983. The Khartoum government controlled these development projects, but entrepreneurs could make fortunes through the intricate network of kinship and political relations that has traditionally driven Sudan's social and economic machinery. In the early 1970s, public enterprises dominated the modern sector, including much of agriculture and most of large-scale industry, transport, electric power, banking, and insurance. This situation resulted from the private sector's inability to finance major development and from an initial government policy after the 1969 military coup to nationalise the financial sector and part of existing industry. Private economic activities were relegated to modern small- and medium-scale industry. The private-sector dominated road transport and domestic commerce and virtually controlled traditional agriculture and handicrafts [20]. In the 1980s, however, Sudan underwent severe political and economic upheavals that have shaken its traditional institutions and its economy. The civil war in the south resumed in 1983, at a cost of more than £SD11 million per day. The main participant in the war against government was the Sudanese People's Liberation Army (SPLA), the armed wing of the Sudanese People's Liberation Movement (SPLM)), under John Garang's leadership. The SPLA made steady gains against the Sudanese army until by 1991 it controlled nearly onethird of the country. The dearth of rainfall in the usually productive regions of Sahel and southern Sudan added to the country's economic problems. Refugees, both Sudanese and foreigners from Eritrea, Ethiopia, Uganda, and Chad, further strained the Sudanese budget. International humanitarian agencies have rallied to Sudan's aid, but the government rejected their help. When Jaafar El Nimeiri was overthrown in April 1985, his political party disappeared, as did his elaborate security apparatus. The military transitional government and the democratically elected coalition government of Sadiq El Mahdi that succeeded the exiled Nimeiri failed to address the country's economic problems. Production continued to decline as a result of mismanagement and natural disasters. The national debt grew at an alarming rate because Sudan's resources were insufficient to service it. Not only did the SPLA shut down Chevron's prospecting and oil production, but it also stopped work on the Jonglei Canal. On June 30, 1989, a military coup d'état led by Colonel (later Lieutenant General) Omar El Basher overthrew the government of Sadiq El Mahdi. Ideologically tied to the Muslim Brotherhood and dependent for political support on the Brotherhood's party, the National Islamic Front, the Basher regime has methodically purged those agencies that dealt primarily with the economy -the civil service, the trade unions, the boards of publicly owned enterprises, the Ministry of Finance and Economic Planning, and the central bank. Under Basher's government, Sudan's economy has been further strained by the most severe famine of this century, the continuation of the war in the south, and a foreign policy that has left Sudan economically, if not politically, isolated from the world community [21].

2.6. Livestock In the early 1990s, drought caused a dramatic decline in livestock raising in Sudan, following a period in the early 1980s when livestock provided all or a large part of the livelihood of more than 40 percent of the country's population. Livestock raising was overwhelmingly in the traditional sector, and, although initial steps had been taken to improve productivity and develop market orientation, for the modern monetised economy the sector

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

19

represented largely a potential asset. In 1983 Sudan's more than 50 million animals comprised the second largest national herd in Africa, next in size to that of Ethiopia. An FAO estimate in 1987 indicated that there were about 20.5 million cattle, 19 million sheep, 14 million goats, and 3 million camels. Other animals included 660,000 donkeys, 21,000 horses, a small number of pigs (kept by such non-Muslim peoples as the Nuba) and 32,000 chickens. By 1991 these numbers had been reduced by perhaps one-third by the drought of 1990-91; the August 1988 floods in the south, described as the worst in Sudan's history; and the ravages of civil war in the south. Poultry was raised mainly by farm families and villagers. A small modern sector consisted of limited government commercial operations and a few semicommercial private ventures. Sudanese cattle are of two principal varieties: Baqarah and Nilotic. The Baqarah and two sub-varieties constituted about 80 percent of the country's total number of cattle. This breed was found chiefly in the western savannah regions and in fewer, although significant, numbers farther to the east from Aali El Nil to Kassala in Ash Sharqi. The Nilotic, constituting approximately 20 percent of all cattle, were common in the eastern hill and plains areas of southeastern El Istiwai, which were free of the tsetse fly, and in those parts of the Bahr El Ghazal and Aali El Nil lying outside the tsetse-fly zone. Because of periodic rinderpest epidemics, the total number of cattle was relatively small until about 1930, when it stood at an estimated 2 million. A vaccination programme began about that time and mass inoculations during the succeeding decades resulted in a great increase in numbers, which by 1970 had reached about 12 million. In the vast areas used by pastoral herders (estimated to be 80 million to 100 million hectares), cattle husbandry was conducted in an economic, cultural, and social context that had evolved over generations. This included an emphasis on increasing herd size as an investment for future family security. Small surpluses (usually bulls) were available for subsistence use, exchange, or sale for local consumption or export. Cattle were also used for marriage payments and among the Nilotes for rituals. Numbers of cattle also helped to establish or increase status and power in a social system in which cattle were the measure of wealth [22]. Most Nilotic cattle were kept by transhumant groups. Migrations, related to the wet and dry seasons, usually did not exceed 150 to 160 kilometers. The majority of the Baqarah strain of cattle belonged to the Baqarah Arabs. The latter were largely nomadic, but since at least the early 1900s had a settled base on which crop cultivation was practiced. The farmers, their relatives, or their agents moved the cattle over traditional migratory routes northward during the rainy season and southward to the area of the Bahr El Arab as the dry season progressed. Migrations in either direction might amount to 400 kilometers. The expansion of mechanised rainfed agriculture in the region used by the Baqarah, continued government efforts to enlarge the cultivated area, and pressures on the land from the growing population have gradually reduced grazing areas. At the same time, traditional cultural forces have brought about a steady increase in cattle numbers. The result has been increasing overstocking and pastures depletion until the outbreak of civil war in 1983 and the devastating droughts of the 1980s and early 1990s decimated not only the Nilotic herds but also livestock throughout Sudan. Many families and indeed whole ethnic groups, who have traditionally survived on their cattle, sheep, goats, or camels, lost all of their herds and were forced to migrate to the three towns (Omdurman, Khartoum, and Khartoum North) in search of sustenance. Sheep were herded chiefly by transhumants in Darfur and Kordofan. Large numbers were found in the drier areas at greater elevations than the usual cattle zone. Several breeds were

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

20

Abdeen Mustafa Omer

raised, but the predominant and preferred one was the so-called desert sheep, which had both good weight and good milk yield. Villagers in El Awsat also raised large numbers of sheep, mostly on a non-migratory basis. Fodder was obtained from crop residues on irrigated and rainfed farms and from vegetation along the rivers and canals. Goats, of which there were three principal breeds (desert, Nubian, and Nilotic), were found throughout the country south of the northern desert areas. They were raised mainly by sedentary families for milk and meat. Goat meat, although less popular than mutton, formed part of the diet of most families, particularly those having low incomes. Goat milk was an important source of protein, and many families in urban areas kept a few goats for their milk. Camels were largely concentrated in the desert and sub-desert regions of northern Darfur, northern Kordofan, and southern Ash Sharqi. They were kept almost entirely by nomadic and semi-nomadic peoples, for whom the animal represented the preferred mode of transport. Camels were also important for milk and for meat. Camel ownership and numbers were sources of prestige in nomadic societies.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.7. Fisheries Sudan's total production of fish, shellfish, and other fishing products reached an estimated 24,000 tons per year in 1988, the latest available yearly figures. This compared with estimates of a potential yearly catch exceeding 100,000 tons. The principal source of fish was the Nile River system. In central and northern Sudan, several lakes and reservoirs have been formed by the damming of the river and its branches: the 180 kilometer section of Lake Nubia on the main Nile in Sudan and the reservoirs behind the Roseires and Sennar dams on the Blue Nile, the Jebel El Aulia Dam on the White Nile, and the Khashm El Girba Dam on the Atbara tributary of the main Nile. These bodies of water accounted for about 11,000 tons of fish against a calculated potential of about 29,000 tons. Production from Lake Nubia through 1979, the latest figures available in 1991, was only 500 tons a year, or about one-tenth of the estimated potential. Inhabitants around the lake, which had formed gradually in the 1960s, had no previous experience in fishing, and the first significant commercial exploitation of the lake's resources had been undertaken by the government's Fisheries Administration. In 1973, a private company also started operations. In the mid- and late 1970s, an ice plant and a cold storage facility were built at Wadi Halfa with assistance from China. China also furnished thirty-five two-ton fishing vessels, a number of transport launches, and other fishing equipment. Cooling plants were constructed at Khartoum and Atbara to hold fish that were brought from Wadi Halfa by railroad. Although ice was used in the shipments, substantial loss occurred, especially during the hotter months. To some extent fish productions from the lake and availability to consumers were increased by these new facilities. The largest potential source of freshwater fish was southern Sudan whose extensive river network and flooded areas in El Sudd were believed able to provide 100,000 to 300,000 tons annually on a sustained basis. Statistics on actual production were unavailable in 1991; much was consumed locally, although limited quantities of dried and salted fish were exported to Zaire where it was in great demand.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

21

The country's second source of fish, the Red Sea coastal area, was relatively unexploited until the late 1970s. Annual production toward the end of the decade amounted to about 500 tons of fish, shellfish (including pearl oysters), and other marine life. In 1978, the British Ministry of Overseas Development began a joint project with the government Fisheries Administration to raise output by making boats, motors, and equipment available to fishermen. Included was an ice plant built at Suwakin to furnish local fishermen with ice for their catch. By 1982 the project was well advanced, and about 2,000 tons of fish were taken annually. A sustained catch of 5,000 tons might eventually be possible.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.8. Forestry Since the early 1900s, extensive areas of woodland and forest have been converted to agricultural use. Large amounts of land classifiable as woodland have been cleared in the development of large-scale mechanised rainfed farming in Ash Sharqi and El Awsat states, and smaller amounts in Aali El Nil and southern Kordofan states. Although Sudan had a large quantity of natural forest, by 1991 much of it remained almost totally unexploited. In the late 1970s, FAO estimated that the country's forests and woodlands totalled about 915,000 square kilometers, or 38.5 percent of the land area. This figure was based on the broad definition of forest and woodland as any area of vegetation dominated by trees of any size. It also included an unknown amount of cleared land that was expected to have forest cover again "in the foreseeable future". An estimate in the mid-1970s by the Forestry Administration, however, established the total forest cover at about 584,360 square kilometers, or 24.6 percent of the country's land area. More than 129,000 square kilometers (about one-quarter) of this amount were located in the dry and semi-arid regions of northern Sudan. These forests were considered valuable chiefly as protection for the land against desertification, but they also served as a source of fuel for pastoral peoples in those regions. The continued population pressure on the land has resulted in an accelerated destruction of forestland, particularly in the Sahel, because charcoal remained the predominant fuel. The loss of forestland in the marginal areas of the north, accelerated by mechanised farming and by drought, resulted in a steady encroachment of the Sahara southward at about ten kilometers a year in the 1980s [23]. The productive forest extended below the zone of desert encroachment to the southern border. It included the savannah woodlands of the central and western parts of the country, which were dominated by various species of acacia, among them Acacia Senegal, the principal source of gum Arabic. Gum Arabic was Sudan's second largest export product, accounting for 80 percent of the world's supply. It is non-toxic, non-calorific, and nonpolluting, having no odour or taste. It is used widely in industry for products ranging from mucilage (for postage stamps) to foam stabilisers to recipient in medicines and dietetic foods. In 1986-87, Sudan produced more than 40,000 tons marketed through the gum Arabic Company. In the late 1980s the drought severely curtailed production. The principal area of productive forest and woodland, however, was in the more moist southern part of the country. Covering an area of more than 200,000 square kilometers and consisting mainly of broadleaf deciduous hardwoods, it remained largely undeveloped in

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

22

Abdeen Mustafa Omer

1990. Timber processed by government mills in the area included mahogany for furniture and other hardwoods for railroad ties, furniture, and construction. Domestic production of timber fell far short of local needs in the 1970s, and as much as 80 percent of the domestic requirement was met by imports. Plantations established by the government Forestry Administration in the mid-1970s totalled about 16,000 hectares of hardwoods and 500 to 600 hectares of softwoods, most were in the south. They included stands of teak and in the higher elevations of the Imatong Mountains, exotic pines. Eucalyptus stands had also been established in the irrigated agricultural areas to serve as windbreaks and to supply firewood. A gradually increasing forest reserve has been developed, and by the mid1970s it covered more than 13,000 square kilometers. Additional protection of forest and woodland areas was provided by several national parks and game reserves that encompassed 54,000 square kilometers in the mid-1970s. Since 1983 the civil war virtually halted forestry production in southern Sudan, from which came the overwhelming amount of forestry products. According to FAO estimates, however, in 1987 Sudan produced 41,000 cubic meters of sawn timber, 1,906,000 cubic meters of other industrial round-wood, and more than 18 million cubic meters of firewood. Each of these categories showed a substantial increase from production levels in the 1970s. The insatiable demand was for charcoal, the principal cooking fuel, and the one major forest product not dependent upon the south. Because wood of any kind could be turned to charcoal, the acacia groves of the Sahel have been used extensively for this purpose, with a resulting rapid advance of deforestation. To improve government forestry conservation and management policy, as well as the issue of land use, in 1990-91 plans were underway to establish a forestry resource conservation project, funded and co-financed by several international development agencies and donors. Sudan vast country, which is characterised by the broad diversity in the soil and multiple in climates from the desert in the north to the tropical climate in the south and refracted number of rivers and included in the rain and a large of groundwater, which led to the diversity and ecological-environmental consequence, in many of the uses and production methods and type crop [24]. The management of each of these resources and its development needs to cover local, regional and international key objective seek by farmers and the state and local and global investors. With regard to organic agriculture, Sudan long history and its many generations pass compatible and integrated with the systems of organic agriculture, managed farms over the decade to reach normal rotations for the production of natural without chemicals in all areas of traditional agriculture - cycle crops with the so-called (Gum cultivating cycle) all these experiences have been benefiting from Sudan in the draft proposal. Figure 1 and Table 1 show the agricultural production and yields. The debate over an international climate change regime has thus far focused primarily on efficiency concerns in developed countries. In the international negotiations over the control of climate change, the developing countries so far have assumed few obligations. At present, this debate has not progressed very far. One of the fundamental principles of environmental policy is that the polluter pays for using the environment and the use of natural resources. This cooperative effort will have to be based on a thorough understanding of how the various participating nations contribute to the process of global climate change, and how that process affects them.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

23

Index (1989 - 100)

Index of Total and Per Capita Food Production, Sudan, 1961 - 1998

180 160 140 120 100 80 60 40 20 0 1960

1970

1980 1990 Per Capita

Metric tons per hectare

Total

5 4 4 3 3 2 2 1 1 0 1960

Yields of Cereals, Roots and Tubers, and Pulses Sudan, 1961 - 1998

1970

1980

Kg per Hectare

Cereals

10 8 6 4 2 0

1960

2000

1990

Roots and Tubers

2000 Pulses

Fertilizer Consumption per Heotare of Cropland, Sudan, 1961 - 1998

1970

1980

1990

2000

2010

Figure 1. Agriculture and food in Sudan.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 1. Agricultural production and yields

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

24

Abdeen Mustafa Omer

The idea of the project proposal by European companies in both England and the Netherlands for the production of specific crops (Sesame, and Sun flower) of the European common market project has been expanded to cover various Sudanese crop to become a model of organic farming in Sudan and a basis for a major through covering all crops in all areas and achieve optimum use of resources to provide Sudan the needs of the common European market and the Middle East region. Figure 2 and Table 2 show Total and net cereal imports and consumptions.

Figure 2. Total and net cereal imports and consumptions.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 2. Food security

2.8.1. Organic Agriculture Programme This programme began in 2001 by ARAB Authority for Agriculture investment and development and aims to produce food commodities free of agricultural pollutants (fertilisers and pesticides), through the use of organic fertilisers and bio-resistance factors in pest control and, therefore, it contributes to environmental sanitation, and agricultural [25].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

25

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Three areas were selected to cover different types of agriculture in Sudan: 1. Traditional farming areas in the rain - sandy land in the middle, east and western Sudan to produce red sesame, beans, corn-Hibiscus, lsenmke, watermelon seeds, gum Arabic was chosen the eastern region of the state of North Kordofan and East State in Delta El Gash and Taker to produce Sunflower and watermelon. 2. Fed agriculture machinery in the plains natural for the production of white sesame, sorghum, sunflower, cotton, gum Arabic - medicinal and aromatic plants - timber forest products and has been chosen Sennar state, The Ministry of Agriculture and Irrigation implementation of the plan began in the area estimated «75» feddans different sources of irrigation and irrigated raincoat, and stated that the area will include vegetables and fruits especially fruit «banana», that pest control in this crops will be organic. Pointing out that the seed of Neem trees (Azadirachta indica) contributed to prove its effectiveness in this area. The National Committee began to address global companies working on certification of organic products to increase the cultivated area bringing Blue Nile to know the potential for producing organic mandate. I expected that the project achieved the desired success in the coming period. 3. Irrigated agriculture - on rivers and valleys for the production of vegetable crops and fruit, sesame, sorghum, sunflower, cotton, gum, wheat and sugarcane were selected mandate of the River Nile. The River Nile is ambitious plans to develop organic farming provide funding (scientific research). Transfer of technology and quality KEY FEATURES plan prepared by the Ministry of Agriculture, Livestock and Irrigation after mandate officials pledged to lift the ceiling interest in agriculture and the allocation (50%) of the area of organic agriculture. Plan also included the gradual shift to a system of organic agriculture mixed crop and animal production, food production and natural products free of chemical contaminants for humans and animals, in addition to benefit from the competitive advantages and preferential treatment for organic products in the global market, Arab and maximising the income of producers and enhance their productivity and protect the environment from degradation and pollution and maintaining the sustainability natural resources. Mentors plan focused on a spate irrigation system, lasting and select specific sites in each system are piled cultivation period and provide broad success factors and mixed organic agriculture and surveys to map each region and for the renewal of the characteristics of the site and the quality of crops and the work of initial or renewed tests of the soil to determine the level of organic matter (fertility). The features of the need to surveys and draw maps of the areas spate irrigation to determine the characteristics of different locations on the level of silting and flooding regularity every year and promote scientific research in the areas of organic agricultural production and provide the necessary funding to encourage companies and agricultural sectors and producers of the founding organic of farms recorded internationally, in addition to the introduction of crop cultivation and promising mandate for such a plant Alhohopa - white sesame – medicinal and aromatic plants horticultural crops and fodder to the establishment of a central market for crops and vegetables standard specifications and the establishment of villages by the modern complexes of trustees and by the Ministry of Agriculture to follow product quality

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

26

Abdeen Mustafa Omer control and develop and disseminate a culture of total quality and build organic production technologies.

The Plan emphasised the important role of agricultural research mandate and urged agricultural research stations on the implementation of research programmes to provide financial and technical support for the draft organic farmers River Nile, providing information on soil management techniques and the destruction of organic materials within the plant and animal field and fermentation of organic materials and uses, in addition to information relevant agricultural-related courses fertilises the soil and control weeds and reduce transmission between crop and pests, well as providing technologies for operations aimed at raising agricultural productivity and the means biological control of pests and weeds. Specific areas were selected for the introduction of the experiment, study and develop plans for the production of these crops under the umbrella of natural organic production as law and conditions of the common European market 91 / 209 Lgistyon EU project objectives: The project aims to produce natural organic products as foundations and approved by the common European market and be products clean and green and 100% natural and free of chemicals, and does not have genetic modifications on the basis of sustainable development to meet the needs of the present generation and future generations. There are also the foundations and standards adhered to by the project aims to achieve:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1. 2. 3. 4. 5. 6. 7.

Biodiversity. Naturally, without the use of any chemicals. Symbiosis resources-plant and animal. Maintaining soil fertility and renewal of natural. Continuity and sustainability. Complementary roles-public sector and private farmers‘ participatory approach. The achievement of exports to the common European market and the region.

In all three areas chosen, the fertility of land through traditional means without the use of chemicals, agricultural practice cycle in the rain traditional (Gum cultivating agricultural cycle) is universally known and certified FAO selected region of the eastern state of north Kordofan region of the reconstruction belt gum Arabic on the same grounds traditional ancestral funding from the Dutch government has been cooperative association of farmers region for the development of the production process and marketing. With funding from the FAO and the Ministry of Agriculture and Forests to introduce organic farming in Sudan tripartite partnership of the Ministry of Agriculture and Forests the private-sector (foreign companies) farmers and organisations in the three regions selected. Been selected working group composed of four national experts and team leader for a foreign-study and a plan of action which includes projects in each area: 1. 2. 3. 4.

Production organic ended manner recognised. Extension services and training, water supply and relocation services and storage. Services for agricultural finance farmers. Foundations and inspection standards and quality control and follow INTERNATIONAL CONTROL SYSTEM. 5. Marketing and promotion.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

27

It was also the composition of the national executive and management includes all competent authorities under the umbrella of the Ministry of Agriculture and Forestry to develop laws and principles and criteria required for expression of supervision and development of organic farming and encourage the private-sector and investors providing funding and training for farmers and workers in this area and to develop productive sector research and marketing. GREEN NILE PROJECT headed by the Ministry of Agriculture and Forests study identified the following objectives:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1. Provide the necessary funding to the Ministry of Agriculture, Forests plans, programmes and bases for the development of organic farming and sustainability. 2. The establishment of effective administration of development and promotion. 3. Develop plans, programmes, Officers as foundations, international standards recognised for development, and marketing. 4. Develop research; training of modern technology verification needs global markets and sustainability. 5. Develop partnerships between various sectors and participate third and strengthening linkages between exporters, investors and fund. 6. Develop bank information, field studies, technical and various economic and increase income to various sectors and the development markets. 7. An action plan has been integrated, multi-stage, and a proposal for the regional administrations in three states. FAO has been providing the project in July 2002 and was passed in August 2002 by the Ministry of Agriculture and Forest Trade in Organic Products Trade in organic products is a new area whereby Sudan can realise additional export earnings and enhance farm incomes, food security and rural development. Estimated at US$10-12 billion annually, trade in organic products is increasing rapidly. It is estimated to reach US$80 billion by 2008. Most of Sudanese commodities are free from chemical contamination and could be sold as organic products provided the necessary infrastructure and procedures are put in place. At present, production and trade on organic products is handicapped by many constraints, including: 1. Absence of a national organising body to oversee the whole range of issues of the supply chain. 2. Lack of awareness of farmers of the opportunities in international markets. 3. Low productivity and high costs of production due to lack of improved technology, weak extension services, and lack of finance. 4. Poor infrastructure and inadequate marketing system. Sudan must build its organic food industry on sound bases to avoid setbacks. If Sudanese commodities exported as organic are found to be not complying with the strict standards and specifications, it would cost a lot of time and resources before Sudan can re-enter the international market on organic products. Cultivation dependent on rainfall falls into two categories. Most Sudanese farmers always have relied on rainfed farming. In addition to these traditional farmers, a large modern mechanised rainfed agriculture sector has developed since 1944-45, when a government project to cultivate the cracking clays of central Sudan started in

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

28

Abdeen Mustafa Omer

the El Gedaref area of Ash Sharqi Province, largely to meet the food needs of army units stationed in the British colonies in eastern Africa (present-day Kenya, Tanzania, and Uganda). An average of about 6,000 hectares a year was cultivated between 1945 and 1953, producing chiefly sorghum, under a sharecropping arrangement between the government and farmers who had been allocated land in the project. These estates proved costly, however, and in 1954 the government began encouraging the private-sector to take up mechanised farming in the area, a policy that continued after Sudan gained independence in 1956. Under the new approach, the government established several state farms to demonstrate production methods and to conduct research. Research activities have been very limited, however, because of staffing and funding problems, and the farms have been operated essentially as regular production units (Table 3).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 3. Sudanese agriculture statistics Agricultural growth (%)

156

[7th of 149]

Agricultural land (% of land area)

56.65 % of land area

[51st of 198]

Agricultural land (sq. km)

1,346,000 sq. km

[8th of 198]

Agricultural machinery (tractors)

11,856

[81st of 190]

Arable and permanent cropland

16,433 thousand hectares

[20th of 148]

Arable land (% of land area)

7.15 % of land area

[124th of 199]

Arable land (hectares)

17,000,000 hectares

[17th of 199]

Cereal production

156 thousand metric tons

[7th of 149]

Cereal yield (kg per hectare)

398.2 kg/ha

[168th of 171]

Cotton exports

450 thousand bales

[11th of 109]

Cotton production

500

[17th of 109]

Fertiliser use

2.3 kg

[125th of 138]

Food production index

107.8 %

[77th of 182]

Labour share

60.2%

[37th of 149]

Meat production

588 thousand metric tons

[47th of 149]

Pesticide use

0 kg

[46th of 45]

Tractor concentration

0.7

[122nd of 147]

Tractors

11,050

[77th of 147]

Value added annual growth (%)

7.52 %

[22nd of 164]

The private-sector response was positive, and by 1960 mechanised farming had spread into other areas of the cracking clay zone in Ash Sharqi and El Awsat provinces. The government set aside rectangular areas that were divided into plots of 420 hectares (later raised in places to 630 hectares) each. Half of these plots were leased to private farmers, the other half left in fallow. After four years, the originally leased land was to be returned to fallow and the farmer was to receive a new lease to an adjacent fallow area. When the

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

29

demand for land grew faster than it could be demarcated, areas outside the designated project limits were taken over by private individuals. The four-year lease proved unpopular because it meant new investment in clearing land every four years, and apparently much of the worked land continued to be cultivated while fallow land was also placed under cultivation. By 1968 more than 750,000 hectares were being cultivated, of which it was estimated that more than 200,000 hectares constituted unauthorised holdings. The average agricultural production growth rate declined, however, from 2.9 percent in the period between 1965 and 1980, to 0.8 percent in the period between 1980 and 1987, the latest available figures. Reportedly, for the 1991-92 seasons, the Ministry of Agriculture and Natural Resources planned for about 7.3 million hectares of food crops to be planted, with about 1.6 million hectares planted in the irrigated sector and about 5.7 million hectares in the rain-fed areas [26]. The investment requirements for mechanised farming favoured prosperous cultivators, and eventually most farms came to be operated by entrepreneurs who raised capital through mortgageable property or other assets in the urban centres. Through arrangements with other individuals, these entrepreneurs frequently managed to control additional plots beyond the legal limit of two. Their ability to obtain capital also permitted them to abandon depleted land and to move into newly demarcated uncleared areas, a practice that had a deleterious impact upon the environment, deprived the indigenous inhabitants of work opportunities, and increased desertification. In 1968, to expand the operator base and to introduce more control over land allocation, crops, and farming methods, the government established the Mechanised Farming Corporation (MFC), an autonomous agency under the Ministry of Agriculture and Natural Resources. From 1968 through 1978, the IDA made three loans to the government to enable the MFC to provide technical assistance, credit for land-clearing and machinery, and marketing aid to individual farmers and cooperative groups. The MFC also became the operator of state farms. In the late 1970s, about 2.2 million hectares had been allocated for mechanised farming, and about 420,000 hectares more had been occupied without official demarcation. About 1.9 million hectares in all were believed to be under cultivation in any one season. Of the officially allocated land, more than 70 percent was held by private individuals. Private companies had also begun entering the field, and some allocations had been made to them. State farms accounted for another 7.5 percent. About 15 percent of the total allocated land was in MFC-IDA projects. The largest proportion of mechanised farming was in Ash Sharqi Province, 43 percent; the next largest in El Awsat Province, 32 percent; and about 20 percent was in Aali El Nil Province. Mechanised farming had also been initiated in southern Kordofan Province through a project covering small-scale farmers in the area of the Nuba Mountains, but under a different government programme. Proposals also have been made for MFC projects using mechanised equipment in other areas of southern Kordofan (some have already been tried) and southern Darfur provinces. There were serious feasibility problems in view of competition for land and conflicts with traditional farming practices, difficult soil conditions, and the probable negative effect on the large numbers of livestock of nomads. Only a few crops had been found suitable for cultivation in the cracking clay area. Sorghum had been the principal one, and during the early 1980s it was planted on an average of about 80 percent of the sown area. Sesame and short-fibre cotton were also grown successfully but in relatively smaller quantities, sesame on about 15 percent of the land and cotton on about 5 percent. Soil fertility has reportedly been declining because of the continued planting of sorghum and the lack of crop rotation. Yields have apparently

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

30

Abdeen Mustafa Omer

decreased, but in view of the area's greatly varying climatic conditions and the uncertain production data, definitive conclusions on trends appeared premature [27]. Grasslands, including acacia-scrub semi-desert and low-woodland savannah, cover twothirds of Sudan, or approximately 600,000 square miles. This domain stretches from the Sahara on the north to the high-woodland savannas and Nilotic flood region on the south, from Chad on the west to Ethiopia and the Red Sea on the east. During the more than 50 years of their rule in Sudan, the British were content to maintain civil order in this region. They did not attempt any basic change in the economies of the nomadic and settled tribes who lived far from Khartoum. When Sudan became independent in the mid-1950s, however, the leaders of the new government saw a poor country whose grasslands had immense potential for development. Eager to spur economic growth, the Sudanese minister of agriculture in the 1954 transitional government asked the United Nations to provide experts from the Food and Agriculture Organisation (FAO). Their arrival set in motion a chain of events for agricultural development in the grasslands that daily grows more complex. The work of those early experts and all but the most recent of their successors have been nearly forgotten, even to development practitioners in Sudan. Few things, it seems, fade from memory faster than a development project whose funding has ceased. Yet new projects begin every year. Designed almost without regard to what has gone before, they often repeat the errors of the past. A critical history of almost a half-century of efforts to improve Sudanese grassland agriculture may therefore be useful both to current workers in Sudan and to anyone broadly interested in the perils of planning [28].

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2.9. Origins of Grassland Development The primary task assigned to the FAO experts in 1954 was to develop policies to check overgrazing, a problem recognised by the British. In 1944 they had established a Soil Conservation Committee that recommended forest plantings on the outskirts of settlements, along with the hillside terracing and stabilisation of active dunes. The chief accomplishment of the committee, however, was the establishment of a Soil Conservation Service dedicated not to constructing terraces or plantings but to excavating hundreds of ponds in the clay plains that cover much of central Sudan. The development of water resources, it was thought, would spread the burden of livestock over a wider area and in this way reduce overgrazing. This approach could work only if livestock populations were stabilised. The government planned to do that by providing no more water than the ranges could support, but the soil-conservation advisor admitted in 1954 that they lacked the staff to do the careful planning this required. Uncontrolled by the government, the livestock population began to rise steeply. In the 25 years after 1917, the numbers of cattle, goats, sheep, and camels in Sudan increased from 3.5 million to about 13 million; in the last decade of British rule, the expansion rate more than doubled to a total of approximately 21 million. Part of that explosive growth may be explained by the decision of the British in 1947 to begin a huge campaign vaccinating cattle against rinder-pest, the most serious of the cattle diseases in Sudan. By 1953 a million inoculations were being given annually. Sales of livestock might have increased to match these numbers, but markets were slow to develop, especially since European quarantine regulations made it impossible for Sudan to

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

31

export meat directly from livestock-producing areas. The inevitable result was overgrazing, not only in the traditional grazing grounds but also in the new areas opened by the Soil Conservation Service. An official reconnaissance of grazing resources was conducted in 1955, and it recorded the absence of the choicest forage on the Buttana, the plain between the Blue Nile and the Atbara River. M.N. Harrison, the author of that reconnaissance, in striking contrast with much later writing on Sudanese nomadism, did not advocate nomad settlement as a means of checking overgrazing. On the contrary, Harrison admired so-called seasonal migration and considered it the only way, for the time being, that large areas of Sudan could be grazed, because some were too dry in winter and others were too muddy and plagued by biting flies in summer. He noted that the annual movement of nomadic livestock had an elegant symmetry, with one set of elongated north-south ovals traced by migrating cattle and another followed by sheep, goats, and camels. Each year, flies and mud in the Bahr El Arab forced cattle northward to pastures vacated by camels, sheep, and goats that had moved into far northern ranges. A few months later, the cattle shifted south and once again yielded their summer grounds to returning herds of camels, sheep, and goats [29]. In recent years, drought and overgrazing, expansion of cultivated areas, and civil unrest have disrupted much of this interlocking movement. Yet the main point of the 1955 report— that only nomads can use much of the area is still true, and Harrison‘s recommendations for improving nomadism remain valid. The government probably could not reduce the existing livestock population; nor could it combat flies or make the ranges of the Bahr El Arab usable throughout the year. Harrison instead recommended the development of a dense pattern of shallow wells that would be cheap, would open unused areas, and would yield small enough quantities of water that large herds would not be drawn to them. In theory the Soil Conservation Service followed the same line of reasoning, but Harrison took the argument several steps further. First, because most of the Sudan‘s annual grass was lost each year in dry-season fires, Harrison called for the development of firelines, mechanically or chemically blazed. Second, he stressed the importance of dividing the land around wells into pastures that would be rested and subjected to control grazing in alternate years. Fences were uneconomic, and rotational grazing would have to be managed by careful herders. For this to work, the range had to be allocated and registered to tribal owners. This final recommendation was crucial, because until individuals or groups knew that the benefits of new or improved ranges would be theirs, all efforts to develop rotational grazing would fail. Although Harrison proposed these recommendations in the mid-1950s, Sudan has yet to find anything better.

3. LAND-USE PLANNING The FAO experts who arrived in the newly independent Sudan no doubt read the 1955 report and appreciated the risks of unplanned water development. Perhaps that is why they soon recommended that the Soil Conservation Service be renamed the Department of Land Use and Rural Water Development. The change augured well, but by 1959 it was clear that the department was not fulfilling its mission. One FAO expert wrote bluntly that "there is no point" in providing water for uncontrolled pastures and expressed deep concern about "the final consequences" if planning did not precede water development. That warning, and others, went unheeded.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

32

Abdeen Mustafa Omer

By 1960 there were 470 ponds on the clay plains. In sandy areas to hold water, dieseldriven pumps lifted water from drilled boreholes; 700 ―wateryards‖ were built between 1953 and 1960, each with storage tanks, watering troughs, and taps for domestic use. Drawing on funds donated by Sweden, Great Britain, Egypt, Yugoslavia, Czechoslovakia, and Italy, the Sudanese government launched three annual "anti-thirst campaigns" between 1966 and 1968. Between them, these campaigns produced more than 1,000 shallow wells, equipped almost 500 new wateryards, and excavated another 100 ponds. The Department of Land Use and Rural Water Development, in a significant reorganisation, was split in 1965 into a Rural Water Development Corporation, which is still an important agency, and a Department of Soil Conservation and Land Use, which after a steep decline is currently inactive.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.1. The Land-Use Battle Was Lost Until 1974, FAO remained the one strong voice speaking in Sudan against unplanned water development. The agency undertook a series of projects to demonstrate the value of land-use planning. In 1958, for example, it supported a programme of grassland improvement and pasture development that included fencing 250,000 acres at Ghazala Gawazat, east of Nyala. That project, the first one for range improvement in Sudan, unfortunately assumed that fencing was sufficient to exclude livestock. Without community support, of course, the fences were soon and permanently breached. Five years later, another FAO expert proposed ten nomad-settlement ranches, and in 1968 a reduced programme of five such ranches was actually begun. Four were near a grossly underused dried-milk plant built by the Soviet Union at Babanusa, near El Muglad; one was farther north. None were successful. In the case of the northern ranch, the families to whom grazing rights had been assigned overstocked the paddocks tenfold, and the livestock of envious neighbouring tribes also finally had to be admitted. In 1962, a much bigger project was started by the FAO Special Fund, the unit of FAO that became the United Nations Development Programme (UNDP) in 1966. The Special Fund project had two objectives: first, to bring water to sandy places where boreholes failed and, second, to introduce improved crop, range, and fallows management as part of a comprehensive land-use plan. This project focused on the neighbourhood of El Obeid in Kordofan. Nomads were already settling spontaneously there, in part because water development made it possible. Many areas remained unsettled, however, either because water could not be found or because non-cracking clay soils were too hard for traditional cultivation. The Special Fund conducted an immense, four-year study whose results were intended to be applicable not only to Kordofan but also westward across Africa to the coast of Senegal. The final report was extraordinarily weak on issues of economics, equitable access to resources, and land tenure. On the question of water supply, for example, cost was almost entirely ignored in the proposed construction of more than 1,000 underground tanks. The noncracking clays were meanwhile judged as unsuited to smallholder settlement, because the project staff believed that their cultivation required "rehabilitation" with tractor-drawn chisel plows. The report therefore proposed mechanised farms of 1,000 acres; the government was to plow the fields and sow pasture grass for a number of years before leasing the farms for cultivation. The study also recommended the creation of three pilot ranches, each a square six

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

33

kilometers on a side. The ranches would be cut into fenced quarters, which would be grazed rotationally after the land had been cleared, deep-plowed, and sown to improved grasses [30]. A barrier fence 300 kilometers long would stand at the southern rim of the study area, with gates to control migrating stock. If the pilot ranches were successful, the fence itself could serve as one edge of a set of additional ranches. None of these recommendations were implemented. Neither the tanks nor the mechanised farms could ever be economically justified, and there was no reason to believe that the ranches would be more successful than previous FAO attempts to fence Sudan‘s ranges. The Special Fund report made a fourth recommendation, however, and under other sponsorship this one was put into practice. The recommendation was that nine model villages should be established on uninhabited sands. The villages would have been modelled on the traditional Sudanese bush fallow on sandy soils. In this system, millet and peanuts are grown for about four years on a plot that is then retired for 15 years to a crop of acacias tapped by farmers for gum Arabic, historically the principal export of western Sudan. Each model village was to be assigned a block of land six kilometers square, much like the proposed ranches. In this case, however, 90 families, each holding approximately 60 acres, would grow fifteen acres of millet, sesame, and peanuts on a field cultivated for four years. The field would then be retired to acacia for 16 years. Each family would annually bring four acres back into cultivation and plant 1,000 acacias on the plots being retired. The fenced periphery of the block, rimmed with Neem trees, would be grazed by livestock, whose numbers would be strictly controlled. Though presented as an original idea, the proposed model villages actually revived a suggestion that had been advanced twice during the last years of British rule, first in 1944 by the Soil Conservation Committee and then a decade later by F. P. Stebbing, a forester with long experience in India. Nothing had come of either proposal, and the model settlements proposed by the Special Fund study were at first similarly ignored. Between 1969 and 1974, however, the UNDP sponsored a very similar project elsewhere in Kordofan and farther west in Darfur. Known as the savannah Development Project, it had three objectives that built directly on the Special Fund study. It sought to reclaim one clay area for ranching, to reclaim another for mechanised farming, and to establish a model settlement on sand. The achievements of the project, however, were minimal. One knowledgeable observer, Martin Adam, wrote that the project "was staffed by diverse 'experts' who failed to get along with each other and faced numerous logistic problems". The experimental ranch, for example, was combined with one of the four pilot ranches that the government had begun near Babanusa in 1968. Under the plan, 24,000 acres of interspersed sands and clays would be seeded with introduced grasses and then grazed seasonally: the higher sands in the wet season, and the lower clays in the dry. Water would come from subsurface dams instead of from livestockconcentrating wateryards; nomads would instead use boreholes drilled on adjoining lands. The project had its innovative aspects, but nothing was done beyond reseeding, water development, and initial stocking. Work on the farm on clay went further, as giant discs and chisel plows ripped 1,500 acres of clay plains at Bano, near El Obeid. The exercise brought no increase in sorghum production, because the clay sealed itself with the first heavy rain and remained impermeable as ever. The best results came instead from planting in furrows laid out on contour lines by a ridger; yields were 50% higher than those from un-contoured, un-ridged plots of sorghum, sesame, and peanuts. Apparently the site was later abandoned; in any case, the record of experiments ceased with the final project document in 1974.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

34

Abdeen Mustafa Omer

The sand settlement was at Khamsat, 30 miles east of El Daem, in Darfur. Here 24,000 acres were subdivided into 100-acre farms for assignment to 240 families. Each family would cultivate four 6-acre plots, with two in millet, one in peanuts, and one in a crop of their choice. After four years, the fields would be replanted to acacia for the following 16. Almost 9,000 peripheral acres were reserved for the exclusive grazing use of the villagers' livestock. Work on the settlement, however, went no further than putting in a wateryard. FAO and UNDP subsequently turned their attention away from land-use planning in Sudan. They did not return to the theme until 1987. The British took up where the United Nations left off. Returning to Sudan after several years of severed relations occasioned by Israel‘s Six-Day War, Great Britain funded four immense land-use studies in Sudan. Two-concerned southern Darfur, one looked at the western slope of Jebel Marra, and the fourth considered the Nuba Mountains. The southern Darfur studies showed that nine-tenths of the population in the study areas had abandoned nomadism, although their animals often made a seasonal migration under the direction of a few family members or hired herders. So many people were looking for a bit of cropland that fallows were being reduced or eliminated. Yields were thus threatened, and conflicts with the remaining nomads were becoming more and more common as traditional ranges were taken over by cultivators. The situation, in short, was substantially the same as that encountered by the Special Fund study earlier in Kordofan. The British also helped to implement the model-village proposal that had first been broached in 1944. In 1977, they joined with the World Bank and the Saudi Fund to support the Western Savannah Development Corporation. The project was cancelled in the midst of a domestic financial crisis and begun again in 1981 on a reduced budget, with a foreign contribution of approximately US$17 million. In 1985, a second phase started; the World Bank, Britain, and the International Fund for Agricultural Development contributed almost US$30 million. Headquartered in Nyala and working in a large area mostly south of that town, the savannah corporation continues to function. Some of its work derives directly from the old FAO projects. It has worked, for example, to see if mechanised plowing on clay soils can be adapted to smallholders. On the pilot-settlement side, it has established several new villages on sand. Each has had room for several hundred families, to be given long leases to plots of nearby land. Much as the old models proposed, the plots have been designed for a 20year rotation, with 16-year fallows and 4-year cultivation periods for fields covering almost 15 acres. The corporation also set out, however, to develop and disseminate new crop rotations and programmes of applying phosphate fertilisers that it and the bank maintain are economic and that, in conjunction with rotation, may make fallows unnecessary. In that event, each family will be able to cultivate permanently a large fraction of its holdings; to that end, the corporation is seeking to develop donkey-drawn plows and weeding implements. Meanwhile, the corporation has undertaken innovative range-management programmes. Several villages have been allowed to fence pastures, to which they now enjoy exclusive grazing rights, in exchange for agreeing to keep livestock out of the enclosure during the wet season, when seed sets. A programme has also begun for managing lands used by nomads. In one case, nearby sedentary farmers received exclusive dry-season rights to the land, while the nomads agree to recognise a division of the range into halves between which they will alternate from year to year. The community-based approach is remarkable; so is the absence of fencing for nomad-occupied lands, which are demarcated only with signal poles.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

35

The success of both the settlement and range programmes is a matter of debate. Although three new, slightly modified settlements were added in the second phase of the project, occupation of the first settlements proceeded very slowly, in part because promised schools and clinics were not rapidly established. Moreover, the settlers themselves were ethnically heterogeneous and potentially unstable as a community, and outsiders attracted by water supplies have located beyond the settlement perimeters. They pose a threat to the settler retention of leaseholds, especially of the fallows. Consultants have gone so far as to recommend that the settlements be terminated, and a corporation-staff member has called them poverty traps that consign settlers to subsistence agriculture. If viewpoints like these become accepted, a long-held faith in planned settlements for the Sudanese grasslands will come to an end. The real test of the range experiments will come when the pastures are improved. At that point, livestock owners will be tempted to concentrate their herds on the improved areas. Unfortunately, the corporation has also fallen into the practice of providing water without simultaneously controlling land-use in the neighbourhood of the well; it has paid for the rehabilitation of more than 150 boreholes that are now creating new examples of the problem that the corporation was conceived largely to solve. Better livestock marketing would help, and to that end the World Bank lent US$25 million in 1978 for the development of unit trains to carry cattle from Nyala to Khartoum, along with an additional sum in 1984 to establish a new stock trail to help cattle make the long walk to Khartoum. Sudanese railroads, however, are almost out of service, and work on the stock trail is progressing slowly. A better hope for short-term range improvement could lie in the now-apparent decline of livestock populations, a result of degraded ranges, the collapse of veterinary services, and political insecurity.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.2. Agricultural Research Twenty years after the first foreign experts came to Sudan; aid agencies recognised that the improvement of grassland agriculture might require a long-term commitment to research. The dramatic result was the creation of the Western Sudan Agricultural Research Project (WSARP) in 1978. The World Bank and the United States Agency for International Development (USAID) contributed US$30 million to the project, which had as its focus a commitment to research on farming systems. It was to be field based, undertaken in cooperation with farmers and livestock owners, and multidisciplinary, with as much attention to social and economic problems as to conventional agricultural science [31]. The origins of WSARP can be traced to the experience of USAID with two failed projects undertaken in 1974, when the United States restored diplomatic relations with Sudan. The first was the Abyei Project in southern Kordofan, which served a combination of southern Dinka and northern Arabs. This project enjoyed high-level support from the Sudanese government, which was eager to show that development projects could succeed along the uneasy line of contact between northerners and southerners. In 1981, after spending several million dollars, USAID terminated the Abyei Project because the Dinka wanted only mechanised cultivation and would not accept the alternatives offered principally animal traction or pesticides and no-till cultivation. The other USAID undertaking, upstream from El Damazin, the town at Roseires Dam, was the Blue Nile Integrated Rural Development Project. Envisioned as an experiment in research seeking "a viable systems approach to

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

36

Abdeen Mustafa Omer

smallholder farms and livestock development which will be suitable for replication", this project provided extension and credit to 2,500 farmers, of whom 1,000 also received tractor services. It consumed approximately US$15 million. In 1983, when US$12 million had been committed, the project manager noted that the credit cooperatives were developing slowly, with acute repayment problems, and that the range-management division, charged with "organising and modernising pastoral activity", had "done little except to conduct a vaccination programme". By the time these projects began, AID realised not only that research was essential to developing Sudanese grassland agriculture but also that this research could not be done in the five years of a typical project. A 1977 study funded by the Ford Foundation offered the basis for a large-scale investment in research. The Ford study showed that agricultural research was dominated in Sudan by the Agricultural Research Corporation. Furthermore, it found that the 175 researchers of the corporation, two-thirds of whom held doctorates from American or British institutions, were strong on laboratory science but weak on fieldwork, strong on pure research but weak on applying it in rural communities. Drawing on the experience of the Ford Foundation in India and the Philippines, the study concluded that the corporation should replace disciplinary groupings with interdisciplinary teams, including social scientists, to address topics such as food grains, cotton, and water management. The study gave special emphasis to the need for research on rainfed agriculture, which had always been neglected by the corporation. The World Bank joined AID in funding WSARP as a semiautonomous unit of the Agricultural Research Corporation. Four stations were to be established: two in Kordofan, at El Obeid and Kadugli, and two in Darfur, at El Fasher and Ghazala Gawazat, the station originally fenced by FAO in 1958. Although project funds were committed, the development of WSARP was painfully slow. After ten years the Darfur stations were still not operating. The Kadugli station, however, has now been functioning for several years, at first staffed by a handful of American scientists. Among the good things to come from it have been socioeconomic surveys of parts of Kordofan, important studies of intercropping legumes with grain, and initial plans for range management, with a proposal for cooperative programmes with the regional government to introduce land planning in tandem with new boreholes to open ungrazed clay plains. More recently WSARP has come under attack, in part because the work had done there has become intellectually insular. Researchers seem less interested in cooperative field studies than in laboratory activities. The team responsible for evaluating the programme in 1986-expressed surprise that plant breeders had ignored the scores of local varieties of sorghum and instead had used whatever seeds they could obtain from the corporation headquarters in the Gezira. The evaluation also observed that the WSARP livestock programme had become focused on supplemental feeding with sesame cake during the dry season, a topic of more interest to animal nutritionists on the staff than to livestock owners.

3.3. Emergency Programmes and Private-Sector Initiatives For WSARP these criticisms could hardly have come at a worse time: Sudan was deep in a crisis induced by drought and by the fall of the seventeen-year Nimeiri regime. USAID decided to concentrate its funds on emergency relief. Rather than try to get WSARP back to its intended purpose, USAID began planning to cut off further support, except for sorghum

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

37

and millet breeding, as early as 1984. The agency's agricultural programmes shifted toward improved seeds and roads, rural credit, and water development. Land-use planning and research were almost completely discarded as USAID announced in 1984 that it would contribute US$60 million to the construction of a US$143 million paved highway from Kosti to El Obeid. The African Development Bank agreed to fund another $40 million segment of this highway. In 1985, USAID sponsored an US$11 million programme for a southern loop connecting to the trunk. USAID was not alone in this reorientation. In 1980, the European Economic Community (EEC) had accepted primary responsibility for two area development schemes in western Sudan. The smaller of the two, the Nuba Mountains Rural Development Project, aimed at improving traditional farming by introducing ox-drawn hoes, seeders, and ridgers. The plan recognised that farmers would be tempted to plow more land at the expense of their fallows and suggested intercropping with acacia as one solution to the problem. Originally funded with approximately US$5 million from the EEC, the project developed slowly. Only about 2,000 comparatively wealthy farmers, 1 percent of the total for the project, had bought the implements when funding expired in 1986. The chief problem, predictably, was a doubling of the cultivated area at the expense of fallows. The project had been justified by assertions that animal traction would boost yields by helping farmers sow on time, establish large plant populations, and weed more thoroughly. In fact, yields did not rise, probably because fallows were being reduced. An evaluation of the project's first phase warned that the area was already over-cropped and contended that research was needed on breeding, fertilisers, crop scheduling, and creation of a sustainable farming system. Yet in 1987, when the EEC budgeted US$14 million to fund a second phase of the project, there was no mention of research to create sustainable cropping systems. A similar shift away from research occurred at the other EEC western project, the Jebel Marra Rural Development Project, in which the EEC has invested some US$25 million since 1980. Previous work in this area by the FAO and several other groups had focused on irrigation, but that emphasis is now muted. Instead, the adaptive-research unit at the project is focused on improvement of traditional local methods of sorghum and millet production. Animal traction is an important component of this research, and the same problem of declining fallows is appearing here as in the Nuba Mountains project. When the first phase of the Jebel Marra project was evaluated in 1985, the chief criticism was that it gave insufficient attention to field-based, cooperative research. The World Bank and UNDP, meanwhile, have jointly prepared an immense afforestation project. Tentative budgets in 1986 included a bank commitment of approximately US$60 million, a sum that was later chopped back to US$22 million. Although the bank remains committed to WSARP, the core of the afforestation project is tree planting, primarily by dissemination of seedlings to farmers. In the preliminary project documents there is no evidence of any attention to the crucial questions of land tenure or how the trees might be used in crop rotations. Even FAO, whose history in Sudan is longer than that of any other foreign agency, has succumbed to the new and impatient approach in its project to manage rangelands around the borehole at El Odaya, southwest of El Obeid. In relying on wholly uneconomic and finally useless barbed wire, it took a giant step backward from the progress made by the Western Savannah Development Corporation. Second-phase plans call for solarpowered electric fencing to be removed when live fencing has been established, but there is no reason to believe that such high-tech solutions will be any more permanent than the nowforgotten ranching experiments of the late 1960s. Other United Nations agencies are

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

38

Abdeen Mustafa Omer

proceeding with equal disregard for the long-term consequences of their actions. For example, the UNICEF is especially enthusiastic about rehabilitating boreholes but gives little attention to land-use planning around them. The most promising element in this third phase of agricultural development for the Sudanese grasslands is the heavy emphasis by almost every developmental agency on local participation, although this often entrusted to non-governmental organisations (NGOs) working as intermediaries between the donors and the Sudanese population. Most of these organisations came to Sudan to help with famine relief during the drought of 1984 and 1985. They then decided to stay in the country, subject to government approval and to continue funding not only from private donations but also from donors like USAID, for whom they often serve as implementing agents. USAID has shown a very strong interest in working with non-governmental organisations. Its involvement with them in Sudan began with relief activity, afforestation, and distribution of hybrid sorghum seed. The Kordofan feeder-road project, however, also provided grain warehouses for the Agricultural Bank of Sudan and nearly US$2 million for private organisations helping small farmers get credit from that bank. Enthusiastic about the activities of non-governmental organisations in stimulating privatesector development, USAID proposed in 1986 to revise the Regional Finance and Planning Project, which would bring these organisations as USAID contractors into rural communities in Kordofan to help them obtain reasonably priced commercial services. The appeal of these organisations that work closely with rural people has become so great that some principal donors have themselves begun acting like non-governmental organisations. After turning away from land-use planning in 1974, UNDP spent the next decade on an assortment of projects designed primarily to strengthen a wide variety of government ministries. In 1987, however, it published its third country programme for Sudan, and once again the focus was on rural development. Five districts were chosen as the sites for area-development schemes where United Nations volunteers would work with residents on improving crops and livestock, incomes, medical services, and water supplies. How these things will be accomplished is not explained in the project-identification document and is apparently to be determined largely on the spot by the volunteers. Attractive as such programmes may be in the short-term, they run the risk of repeating the mistake of the early wave of developmental projects in Sudan. Responding to the need for water, in other words, they will contribute to the continued degradation of the surrounding land. Without effective land-use planning, it is difficult to avoid that result. The Ford Foundation has attempted to minimise the problem by providing funds for research and planning to non-governmental organisations, but this type of assistance is essentially palliative. It cannot overcome the tendency of these groups to provide potpourris of services that are useful in a narrow sense and potentially calamitous in a broad one. The foundation's involvement is simply too modest to bring about successful land-use planning or to sustain fundamental research.

3.4. The Nettle of Land Tenure In fairness to the aid agencies, there is little point in putting money into programmes whose achievements are as minimal as those supporting land-use planning and grassland

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

39

research in Sudan. The proper response, however, is not to abandon these things but to determine why they have failed in the past and how they can be made to succeed in the future. In approaching that problem, one is quickly brought to the difficult subject of land tenure. Although stabilising land tenure is of the utmost importance both for implementing land-use plans and for providing an incentive for sustainable farming systems, almost no progress has been made in Sudan even with land registration, the first step in the process. The problem is worsening. Twenty years ago, stabilising land tenure seemed manageable, because although land distant from the Nile River was rarely in registered private ownership, usufructary rights to most of it were recognised and administered by native authorities that often were well aware of the value of land-use planning. The Unregistered Lands Act of 1971 essentially abolished the existing tenure structures by declaring unregistered lands to be governmental property. Other legislation at that time reassigned many powers of traditional native authorities to local councils, which in theory could zone unregistered land-uses, at least until 1983. The Civil Transactions Act, one of several Islamic laws passed that year, reverted to recognising usufructary rights to unregistered lands and with the fall of the Nimeiri regime in 1985 the powers of the native authorities were partially restored. The situation is confused because it is unclear whether the Civil Transactions Act has or has not been repealed. If it has not, the situation is theoretically as it was before 1971; if it has; unregistered lands remain governmental property, although the local governmental organisations that might plan their use no longer exist. Moreover, there are few legal experts to administer a registration programme even if one is begun. The instability of land tenure undermines the few continuing land-planning efforts. A resource inventory and rehabilitation-development strategy for Kordofan, for example, was recently prepared for the UNDP by the Institute of Environmental Studies, a unit of the University of Khartoum established in 1978 with a grant from the Ford Foundation. The institute drew on university staff for the assignments, and among its consultants were persons who worked in Kordofan on the FAO Special Fund study of 1967. Their influence can be seen in the new study's call for land-use zoning. Other calls for land-use planning have run afoul of donor indifference. In 1976, for example, the government announced the Desert Encroachment Rehabilitation Programme. Although an essential element was the creation of an office with land-planning capabilities, the project was dissolved into a set of proposals, some of which were funded and some of which were not. Eleven years later, when the new Intergovernmental Authority for Drought and Development held its first donor conference, Sudan's plan was prepared by the same forester who had primary responsibility for the 1976 programme. Once again the plea for planning was ignored in favour of attention to specific projects, shelterbelts for mechanised farming, and fertilisers for traditional cultivators, sand-dune fixation, range rehabilitation, and fuelwood plantations. Donors, it seems, want visible results, not intangible ones, however valuable. In defense of this orientation, it can be said that there is no point recommending land-use planning in an environment without secure land titles, nor any point in exploring new crop rotations and range management methods when those methods cannot be applied in the absence of secure land tenure. By elimination, donors are left to invest in infrastructure and the support of private enterprise, even though these undertakings threaten to bring back on a grand scale the environmental problems that worried the British 40 years ago.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

40

Abdeen Mustafa Omer

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.5. Investment in Professional Development What is to be done? Some hint of an answer arises from the fact that land tenure is not likely to be stabilised by anyone except the Sudanese themselves. When eventually they address it, they will discover that donors are probably unwilling to fund a triple-pronged set of programmes in land-use planning, research, and private-sector stimulation. All these things must be done, and they will probably only be done by the Sudanese themselves. Only they will be able to do it at a cost affordable to the country and its donors. Ensuring that the Sudanese are capable of implementing these tasks thus becomes a matter of the highest priority. It is by no means assured: the ranks of the civil service and the universities have been severely depleted, as well-trained persons have found financially rewarding opportunities in other countries. The collapse of telephones, mails, and internal air and rail transportation makes the necessary task more difficult each year. Nonetheless, it is one of Sudan's more remarkable achievements to have created, almost from nothing 30 years ago, a corps of hundreds of professionals. Some able and capable personnel remain, and young professionals are returning even now from advanced training abroad. No one can say how long it will take, before the country gives them the support they need, but foreigners in the meantime can do few more useful things than help keep such people in Sudan. An excellent example is a recent Ford Foundation grant to Sudan's National Council for Research, which has used the funds to sponsor a research competition for multidisciplinary fieldwork in the grasslands. Young researchers have been given support under this programme to study labour costs, locally made plows, and wildlife populations. In the broad scheme the grant is small, but the research personnel are highly capable, and the council has helped Sudan retain some vital personnel. Many donors will find this an unappealing suggestion, partially because it is neither dramatic nor immediately responsive to the country's urgent needs. Nonetheless, this alternative must be considered in the light of available choices. As this historical survey suggests, the other choices have consistently led to programmes that have been almost totally disappointing, despite initial enthusiasms. Today, the enthusiasm felt by development workers in Sudan is directly proportional to their ignorance of history. The more that history is weighed critically, the likelier will be the conclusion that Sudan needs a more cautious approach, even a temporising one like the one proposed here. Figure 3 shows the states of Sudan. The economy of Sudan depends heavily on agriculture for employment, production and consumption. The share of agriculture in Sudan‘s gross domestic product and exports during the period 1987 –1994 was 31% and 85%, respectively. The available resources– in terms of arable land, water and livestock- suggest that agriculture in Sudan provides the best opportunities for future economic growth and development. Yet, the country‘s agriculture is largely traditional and is characterised by low and fluctuating productivity, which means that modernisation and development are imperative (Figure 4).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

Figure 3. Map of Sudan.

Figure 4. Cotton cultivation in Sudan.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

41

42

Abdeen Mustafa Omer

CONCLUSIONS The agrarian credit market has recently undergone significant developments in connection with macroeconomic policy reorientation. To correct growing internal and external imbalances and to achieve desirable growth and stability, a medium-term three years National Economic Salvation Programme (NESP) was launched in 1990. With economic liberalisation as an overall objective, the programme sought to reallocate resources to enhance production particularly in agriculture in order to achieve food security and to generate export surplus; to boost the role of the private sector; to remove price and exchange rate controls; to privatise public entities; and to achieve financial stability. By 1992 several price and exchange rate controls were removed. By and large, the most important implication of the recent financial policy is that formal agricultural credit, which between 1970 and 1989 depended almost exclusively on government sources, has since 1990 been assigned to private sources. Indirect measures were taken by the NESP to enhance the involvement of formal financial institutions especially in irrigated agriculture. For example, the activities of the Agricultural Bank of Sudan have been expanded through government support, and commercial banks consortium (CBC) was set up in order to raise credit availability and lower individual bank exposure by means of risk pooling. Nevertheless, it was difficult in the early 1990s to predict the response of Sudan‘s the fragmented agrarian credit market to the new macroeconomic environment. There was doubt about the ability of the formal financial system to create efficient financial instruments that are compatible with Islamic principles as well as the nature of agriculture. To examine the issues involved, the study sets out two main objectives:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

 

To describe the institutional structure, practice and limitations of the agrarian credit market in Sudan. To develop and estimate a model of household participation in the rural credit market.

The literature on farm economics has come a long way from the early focus on the behaviour of individual farmers within a neo-classical framework, and the rudimentary assumptions of flexible land access and absence of a labour market. In early studies, a production function is normally specified and the marginal conditions for optimal resource use derived, given various consumption and production constraints, and assuming that farmers have choice over the type and quantities of inputs and outputs. One of the major limitations of early models are the assumption that there is complete certainty so that production and consumption decisions are separable. The household fixes a production level and accordingly decides how much labour to hire in or out, how much to lend or borrow, and how much to consume of home-produced and purchased goods in order to attain a desired utility level. The assumption of a perfect capital market implies that credit supply and demand are easily derivable from the utility maximisation model, i.e., given an unconstrained loan supply at a certain interest rate, loan demand is determined at the point of tangency between the utility curves of the borrower and the lender. The government within its policy of withdrawal from provision of goods and services handed over all the small- and medium-size irrigation schemes under its control to the farmers.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

43

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

APPENDIX 1. DOCUMENTS 2005 Global Refugee Trends: Statistical Overview of Populations of Refugees Hamadab Dam Project: Critical Juncture for Peace, Democracy, and the Environment: Sudan and the Merowe/Hamadab Dam Project. Beyond Firewood: Fuel Alternatives and Protection Strategies for Displaced Women and Girls. Capacity Building for Sustainable Development: An overview of UNEP environmental capacity development initiatives. Challenges Facing Returnees in Sudan. Country Pasture Forage Resource Profiles Sudan, and Forest Genetic Resources Darfur‘s Turbulent Times, and Ecology, Politics and Violent Conflict Developments in Forestry Education in the Sudan The United Nations Work Plan for the Sudan 2005 Forestry and the Development of a National Forestry Extension Service: A Sudan Case Study Fuels 2006: A Survey of the Humanitarian Fuels Situation in the Context of Humanitarian and Peacekeeping Operations Fuels 2006: A Survey of the Humanitarian Fuels Situation in the Context of Humanitarian and Peacekeeping Operations I n t e r n a l Di s p l a c e m e n t: Global Overview of Trends and Developments in 2005 Guns or Growth? Assessing the Impact of Arms Sales on Sustainable Development Improving Traditional Grassland Agriculture in Sudan Joint Assessment Mission (JAM) Volume I: Framework for Sustained Peace, Development and Poverty Eradication Joint Assessment Mission (JAM) Volume III: Cluster Reports Juba Assessment Report: Sudan Local Governance and Capacity Building through Strategic Participatory Town Planning Manual on Compliance with and Enforcement of Multilateral Environmental Agreements New Appeal for Drought-hit Sudan Official Sudan Oil and Gas Summit, and Oil and Violence in Sudan Profile of Internal Displacement: Sudan Raising the Stakes: Oil and Conflict in Sudan Report and Recommendation of the President for the Western Sudan Resources Management Programme Ridding the World of POPs: A Guide to the Stockholm Convention on Persistent Organic Pollutants. Rising Tensions over the Nile River Basin Scarcity and Surfeit: The Ecology of Africa's Conflicts Statistical Year Book 2001 Strategic Action Programme for the Red Sea and Gulf of Aden Studies on Consumption of Forest Products in the Sudan - Woodfuel Consumption in the Household Sector Country Operations Plan - Sudan: Overview, and Sudan Country Profile 2006 Sudan Millennium Development Goals: Interim Unified Report Sudan to ship 400,000 Barrels of New Crude Sudan Millennium Development Goals: Interim Unified Report Summary Report Darfur Rapid Environment Impact Assessment Sustainable Return depends on Collaborative Approach

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

44

Abdeen Mustafa Omer

The Nuba Mountains of Sudan: Resource Access, Violent Conflict, and Identity The Scorched Earth: Oil and War in Sudan Tide of Censure for African Dams Populations of Concern to UNHCR: A Statistical Overview Urban Intensification in Metropolitan Khartoum: Influential Factors, Benefits and Applicability Water, Sanitation and Hygiene Links to Health Fact sheet: Sudan - Women, agriculture and rural development 2006 Work Plan for Sudan, and Analysis of Nine Conflicts in Sudan Brief Overview of Sudan Economy and Future Prospects for Agricultural Development Ecology Textbook for the Sudan Independent Review of the Environmental Impact Assessment for the Merowe Dam Project Experience Sharing Tour and Workshop on Shelterbelts and Fuel Wood Substitutes in Sudan Forest Resources of Tropical Africa Part II Country Briefs Gash Sustainable Livelihoods Regeneration Project Gezira Scheme Grasslands of the World Identification and Concentration of Organochlorine Residues in Blood of Sudanese Workers at Gezira Agricultural Scheme Inter-Country Workshop on Public Health Pesticides Management in the Context of the Stockholm Convention on Persistent Organic P Lateritic Soils in Distinct Tropical Environments: Southern Sudan and Brazil Local Governance to secure Access to Land and Water in the Lower Gash Watershed, The Sudan Management of Public Health Pesticides in Sudan National Report to the Fifth Session of the United Nations Forum on Forests Nuba Mountains Land and Natural Resources Study Southern Sudan: Antelope Survey Update No. 5 State of Forest Genetic Resources in Sudan, and A Country Study: Sudan The Impact of Conflict on Wildlife and Food Security: The Case of Boma Watershed Erosion and Sediment Transport. Prevention and Disposal of Obsolete and Unwanted Pesticide stocks in Africa and the Near East Under-Secretary-General for Humanitarian Affairs warns of Sudan Disaster 600,000 People at Immediate Risk of Starvation, and UNHCR Global Appeal 2006 Vector Control Situation within the Context of Sectoral Coordination in Sudan

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Agriculture Policy in Sudan

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

APPENDIX 2. FACTS ABOUT SUDAN Location:

Northern Africa, bordering the Red Sea, between Egypt and Eritrea

Geographic coordinates:

It extending between latitudes 3º‘N and 23º‘N, and longitudes 21º 45‘E and 39º‘E.

Map references:

Africa

Area:

Total: 2,505,810 sq km Land: 2.376 million sq km Water: 129,810 sq km

Area - comparative:

Slightly more than one-quarter the size of the US

Land boundaries:

Total: 7,687 km border countries: Central African Republic 1,165 km, Chad 1,360 km, Democratic Republic of the Congo 628 km, Egypt 1,273 km, Eritrea 605 km, Ethiopia 1,606 km, Kenya 232 km, Libya 383 km, and Uganda 435 km

Coastline:

853 km

Maritime claims:

Territorial sea: 12 nm Contiguous zone: 18 nm Continental shelf: 200-m depth or to the depth of exploitation

Climate:

Tropical in south; arid desert in north; rainy season varies by region (April to November)

Terrain:

Generally flat, featureless plain; mountains in far south, northeast and west; desert dominates the north

Elevation extremes:

Lowest point: Red Sea 0 m Highest point: Kinyeti 3,187 m

Natural resources:

Petroleum; small reserves of iron ore, copper, chromium ore, zinc, tungsten, mica, silver, gold, hydropower, etc.

Land use:

Arable land: 6.83% Permanent crops: 0.18% Other: 92.99% (2001)

Irrigated land:

19,500 sq km (1998 est.)

Natural hazards:

Dust storms and periodic persistent droughts

Environment current issues:

Inadequate supplies of potable water; wildlife populations threatened by excessive hunting; soil erosion; desertification; periodic drought

Environment international agreements:

Party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Law of the Sea, Ozone Layer Protection signed, but not ratified: none of the selected agreements

Geography - note:

Largest country in Africa; dominated by the Nile and its tributaries

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

45

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

46

Abdeen Mustafa Omer People

Sudan

Population:

40,187,486 (July 2005 est.)

Age structure:

0-14 years: 43.2% (male 8,865,331/female 8,488,982) 15-64 years: 54.5% (male 10,952,566/female 10,930,218) 65 years and over: 2.4% (male 513,679/female 436,710) (2005 est.)

Median age:

Total: 18.07 years Male: 17.86 years Female: 18.29 years (2005 est.)

Population growth rate:

2.6% (2005 est.)

Birth rate:

35.17 births/1,000 population (2005 est.)

Death rate:

9.16 deaths/1,000 population (2005 est.)

Net migration rate:

-0.02 migrant(s)/1,000 population (2005 est.)

Sex ratio:

At birth: 1.05 male(s)/female Under 15 years: 1.04 male(s)/female 15-64 years: 1 male(s)/female 65 years and over: 1.18 male(s)/female Total population: 1.02 male(s)/female (2005 est.)

Infant mortality rate:

Total: 62.5 deaths/1,000 live births Male: 63.29 deaths/1,000 live births Female: 61.67 deaths/1,000 live births (2005 est.)

Life expectancy at birth:

Total population: 58.54 years Male: 57.33 years Female: 59.8 years (2005 est.)

Total fertility rate:

4.85 children born/woman (2005 est.)

HIV/AIDS adult prevalence rate:

2.3% (2001 est.)

HIV/AIDS people living with HIV/AIDS:

400,000 (2001 est.)

HIV/AIDS deaths:

23,000 (2003 est.)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan Major infectious diseases:

Degree of risk: very high Food or waterborne diseases: bacterial and protozoa diarrhoea, hepatitis A, and typhoid fever Vectorborne diseases: malaria, dengue fever, African trypanosomiasis (sleeping sickness) are high risks in some locations Water contact disease: schistosomiasis Respiratory disease: meningococcal meningitis (2004)

Nationality:

Noun: Sudanese (singular and plural) Adjective: Sudanese

Ethnic groups:

Black 52%, Arab 39%, Beja 6%, foreigners 2%, other 1%

Religions:

Sunni Muslim 70% (in north), indigenous beliefs 25%, Christian 5% (mostly in south and Khartoum)

Languages:

Arabic (official), Nubian, Ta Bedawie, diverse dialects of Nilotic, NiloHamitic, Sudanic languages, English Note: programme of "Arabisation" in process

Literacy:

Definition: age 15 and over can read and write total population: 61.1% male: 71.8% female: 50.5% (2003 est.)

Government

Sudan

Country name:

Conventional long form: Republic of the Sudan Conventional short form: Sudan Local long form: Jumhuriyat as-Sudan Local short form: As-Sudan Former: Anglo-Egyptian Sudan

Government type:

Authoritarian regime - ruling military junta took power in 1989; government is run by an alliance of the military and the National Congress Party (NCP), formerly the National Islamic Front (NIF), which espouses an Islamist platform

Capital:

Khartoum

Administrative divisions:

26 states (Wilaya, singular - Wilaya); A'ali an Nil (Upper Nile), El Bahr El Ahmar (Red Sea), El Buhayrat (Lakes), El Jazirah (El Gezira), El Khartoum (Khartoum), El Gedaref (Gedaref), El Wahdah (Unity), An Nil El Abyad (White Nile), An Nil El Azraq (Blue Nile), Ash Shamaliyah (Northern), Bahr El Jebel (Bahr al Jebel), Gharb El Istiwa'iyah (Western Equatoria), Gharb Bahr El Ghazal (Western Bahr El Ghazal), Gharb Darfur (Western Darfur), Gharb Kurdufan (Western Kordofan), Janub Darfur (Southern Darfur), Janub Kurdufan (Southern Kordofan), Junqali (Jonglei), Kassala (Kassala), Nahr an Nil (Nile), Shamal Bahr El Ghazal (Northern Bahr El Ghazal), Shamal Darfur (Northern Darfur), Shamal Kurdufan (Northern Kordofan), Sharq El Istiwa'iyah (Eastern Equatoria), Sennar (Sennar), Warab (Warab)

Independence:

1 January 1956 (from Egypt and UK)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

47

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

48

Abdeen Mustafa Omer National holiday:

Independence Day, 1 January (1956)

Constitution:

12 April 1973; suspended following coup of 6 April 1985; interim constitution of 10 October 1985 suspended following coup of 30 June 1989; new constitution implemented on 30 June 1998 partially suspended 12 December 1999 by President BASHIR

Legal system:

Based on English common law and Islamic law; as of 20 January 1991, the now defunct Revolutionary Command Council imposed Islamic law in the northern states; Islamic law applies to all residents of the northern states regardless of their religion; some separate religious courts; accepts compulsory ICJ jurisdiction, with reservations

Suffrage:

17 years of age; universal, but non-compulsory

Executive branch:

Chief of state: President Lt. Gen. Omar Hassan Ahmad al-BASHIR (since 16 October 1993); First Vice President Salva KIIR (since 4 August 2005), Second Vice President Ali Osman TAHA (since 20 September 2005); note the president is both the chief of state and head of government Head of government: President Lt. Gen. Omar Hassan Ahmad al-BASHIR (since 16 October 1993); First Vice President Salva KIIR (since 4 August 2005), Second Vice President Ali Osman TAHA (since 20 September 2005); note - the president is both the chief of state and head of government Cabinet: Council of Ministers appointed by the president; note - the National Congress Party or NCP (formerly the National Islamic Front or NIF) dominates al-Basher‘s cabinet. Elections: president elected by popular vote for a five-year term; election last held 13-23 December 2000 (next to be held N.A.). Election results: Field Marshall Omar Hassan Ahmad al-BASHIR reelected president; percent of vote - Omar Hassan Ahmad al-BASHIR 86.5%, Jaafar Muhammad NUMAYRI 9.6%, three other candidates received a combined vote of 3.9%; election widely viewed as rigged; all popular opposition parties boycotted elections because of a lack of guarantees for a free and fair election. Note: al-BASHIR assumed power as chairman of Sudan's Revolutionary Command Council for National Salvation (RCC) in June 1989 and served concurrently as chief of state, chairman of the RCC, prime minister, and minister of defense until mid-October 1993 when he was appointed president by the RCC; he was elected president by popular vote for the first time in March 1996

Legislative branch:

Unicameral National Assembly (360 seats; 270 popularly elected, 90 elected by supra assembly of interest groups known as National Congress; members serve four-year terms). Elections: last held 13-22 December 2000 (next to be held N.A.). Election results: NCP 355, others 5

Judicial branch:

Supreme Court; Special Revolutionary Courts

Political parties and leaders:

The government allows political "associations" under a 1998 law revised in 2000; to obtain government approval parties must accept the constitution and refrain from advocating or using violence against the regime; approved parties include the National Congress Party or NCP [Ibrahim Ahmed UMAR], Popular National Congress or PNC [Hassan ElTURABI], and over 20 minor, pro-government parties

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan Political pressure groups and leaders:

Democratic Unionist Party [Muhammad Othman AL-MIRGHANI]; National Democratic Alliance [Muhammad Othman AL-MIRGHANI, chairman]; Sudan People's Liberation Movement/Army [Dr. John GARANG]; Umma Party [Sadiq El MAHDI]

International organization participation:

ABEDA, ACP, AfDB, AFESD, AMF, AU, CAEU, FAO, G-77, IAEA, IBRD, ICAO, ICCt (signatory), ICRM, IDA, IDB, IFAD, IFC, IFRCS, IGAD, ILO, IMF, IMO, Interpol, IOC, IOM, ISO, ITU, LAS, MIGA, NAM, OIC, OPCW, PCA, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UPU, WCO, WFTU, WHO, WIPO, WMO, WToO, WTO (observer)

Diplomatic representation in the US:

Chief of mission: Ambassador (vacant); Charge d'Affaires, Ad Interim Khidir Haroun AHMED (since April 2001) Chancery: 2210 Massachusetts Avenue NW, Washington, DC 20008 Telephone: [1] (202) 338-8565 FAX: [1] (202) 667-2406

Diplomatic representation from the US:

Chief of mission: Ambassador (vacant); Charge d'Affaires Gerard M. GALLUCCI Embassy: Sharia Abdul Latif Avenue, Khartoum Mailing address: P. O. Box 699, Khartoum; APO AE 09829 Telephone: [249] (11) 774611 or 774700 FAX: [249] (11) 774137 Note: US Consul in Cairo is providing backup service for Khartoum

Flag description:

Three equal horizontal bands of red (top), white, and black with a green isosceles triangle based on the hoist side

Economy

Sudan

Economy overview:

Sudan has turned around a struggling economy with sound economic policies and infrastructure investments, but it still faces formidable economic problems, starting from its low level of per capita output. From 1997 to date, Sudan has been implementing IMF macroeconomic reforms. In 1999, Sudan began exporting crude oil and in the last quarter of 1999 recorded its first trade surplus, which, along with monetary policy, has stabilised the exchange rate. Increased oil production, revived light industry, and expanded export processing zones helped sustain GDP growth at 6.4% in 2004. Agriculture production remains Sudan's most important sector, employing 80% of the work force, contributing 39% of GDP, and accounting for most of GDP growth, but most farms remain rain-fed and susceptible to drought. Chronic instability - resulting from the long-standing civil war between the Muslim north and the Christian/pagan south, adverse weather, and weak world agricultural prices - ensure that much of the population will remain at or below the poverty line for years.

GDP (purchasing power parity):

$76.19 billion (2004 est.)

GDP - real growth rate:

6.4% (2004 est.)

GDP - per capita:

Purchasing power parity - $1,900 (2004 est.)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

49

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

50

Abdeen Mustafa Omer GDP composition by sector:

Agriculture: 38.7% Industry: 20.3% Services: 41% (2003 est.)

Labour force:

11 million (1996 est.)

Labour force - by occupation:

Agriculture 80%, industry and commerce 7%, government 13% (1998 est.)

Unemployment rate:

18.7% (2002 est.)

Population below poverty line:

40% (2004 est.)

Household income or consumption by percentage share:

Lowest 10%: N.A. Highest 10%: N.A.

Inflation rate (consumer prices):

9% (2004 est.)

Investment

(Gross fixed): 16% of GDP (2004 est.)

Budget:

Revenues: $3.057 billion Expenditures: $2.965 billion, including capital expenditures of $304 million (2004 est.)

Public debt:

79.7% of GDP (2004 est.)

Agriculture products:

Cotton, groundnuts (peanuts), sorghum, millet, wheat, gum Arabic, sugarcane, cassava (tapioca), mangos, papaya, bananas, sweet potatoes, sesame; sheep, livestock

Industries:

Oil, cotton ginning, textiles, cement, edible oils, sugar, soap distilling, shoes, petroleum refining, pharmaceuticals, armaments, automobile/light truck assembly

Industrial production growth rate:

8.5% (1999 est.)

Electricity production:

2.581 billion kWh (2002)

Electricity production by source:

Fossil fuel: 52.1%; and Hydro: 47.9% Nuclear: 0%; Other: 0% (2001)

Electricity consumption:

2.4 billion kWh (2002)

Electricity exports:

0 kWh (2002)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan Electricity imports:

0 kWh (2002)

Oil - production:

345,000 bbl/day (2004 est.)

Oil consumption:

70,000 bbl/day (2004 est.)

Oil - exports:

275,000 bbl/day (2004)

Oil - imports:

0 bbl/day (2004)

Oil - proved reserves:

1.6 billion bbl (2004 est.)

Natural gas:

Proved reserves: 99.11 billion cu m (2004)

Current account balance:

$-763.6 million (2004 est.)

Exports:

$3.395 billion f.o.b. (2004 est.)

Exports commodities:

Oil and petroleum products; cotton, sesame, livestock, groundnuts, gum Arabic, sugar

Exports:

Partners: China 66.9%, Japan 10.7%, Saudi Arabia 4.4% (2004)

Imports:

$3.496 billion f.o.b. (2004 est.)

Imports commodities:

Foodstuffs, manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, wheat

Imports partners:

China 13%, Saudi Arabia 11.5%, UAE 5.9%, Egypt 5.1%, India 4.8%, Germany 4.5%, Australia 4.1%, Japan 4% (2004)

Reserves of foreign exchange and gold:

$1.652 billion (2004 est.)

Debt - external:

$21 billion (2004 est.)

Economic aid:

Recipient: $172 million (2001)

Currency (code):

Sudanese Dinar (SDD)

Currency code:

SDD

Exchange rates:

Sudanese Dinars per US dollar - 257.91 (2004), 260.98 (2003), 263.31 (2002), 258.7 (2001), 257.12 (2000)

Fiscal year:

Calendar year

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

51

52

Abdeen Mustafa Omer

REFERENCES [1] [2] [3] [4] [5] [6] [7] [8] [9] [10]

[11]

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

[12] [13]

[14] [15]

[16]

[17]

[18]

Bret Wallach. 1989. Improving Traditional Grassland Agriculture in Sudan. Geographical Review (79:2), April 1989, pp. 143-160. Omer, A.M., et al. 2003. Biogas energy technology in Sudan. Renewable Energy, 28 (3): 499-507. Omer, A.M. 2007. Review: Organic waste treatment for power production and energy supply. Cells and Animal Biology 1 (2): 34-47. Omer, A.M. 2008a. Green energies and environment. Renewable and Sustainable Energy Reviews 12: 1789-1821. Omer, A.M. 2007. Renewable energy resources for electricity generation in Sudan. Renewable and Sustainable Energy Reviews 11: 1481-1497. Omer, A.M. 1995. Water resources in Sudan. NETWAS 2(7). Omer, A. M. 2008b. People, power and pollution. Renewable and Sustainable Energy Review 12 (7): 1864-1889. Omer, A. M. 2008c. Water resources and freshwater ecosystems in Sudan. Renewable and Sustainable Energy Reviews 12 (2008): 2066-2091. Omer, A.M. 2000. Water and environment in Sudan: the challenges of the new Millennium. NETWAS 7(2): 1-3. Omer, A.M. 2001. Water development in Sudan: Present and future challenges. Arab Organisation for Agriculture Development (AOAD). Arabic Journal of Irrigation Water Management, Vo.2, p.48-58, Khartoum: Sudan. Omer, A.M. 2004. Water resources development and management in the Republic of the Sudan. Water and Energy International 61(4): 27-39. Omer, A.M. 2008d. Water resources in the Sudan. Water International 32 (5): 894-903. Abdeen M. Omer. 2004. Water resources development and management in the Republic of the Sudan. Water and Energy International Journal 61(4) (2004) 27-39. New Delhi, India, October-December. Abdeen M. Omer. 2000. Biomass energy potential and applications, Agriculture Development in Arab World, Vol.19, No.4, Khartoum, Sudan, (2000) 1-15. Abdeen M. Omer. 2005. Agricultural biomass production is an energy option for the future, In: Proceedings of the Dubrovnik Conference on Sustainable Development of Energy, Water and Environment systems, Paper No. 17, ES2 Energy Evaluation, Dubrovnik, Croatia, 2005. Abdeen M. Omer. 2006. The puzzle of consumption, development and sustainability, In: Proceedings of the National Conference for development and Environment, Khartoum, Sudan, Sudan Engineering Society Journal, Vol.52, No.47, p. 35-43, 18-20 September 2006. Abdeen M. Omer. 2007. Green energy saving mechanisms, In: Proceedings of the First Plan-Arab Conference on environmental Science and Technology, Part VI Renewable Energy Sources- Solar and Geothermal Energy, Sharjah, UAE, 11-15 March 2007. Abdeen M. Omer. 2007. Green energy saving mechanisms, In: Proceedings of the 6th Jordanian International Mechanical Engineering Conference (JIMEC‘6), Amman, Jordan, 22-24 October 2007.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Agriculture Policy in Sudan

53

[19] Abdeen M. Omer. 2007. Chapter 6: Energy, water and sustainable development, In: Focus on Sustainable Development Research Advances, Editor: Barton A. Larson, 2007 NOVA Science Publishers, Inc., p.189-205, New York, USA, 2007. [20] Abdeen M. Omer. 2008. The environmental and economical advantages of agricultural wastes for sustainable development, In: Proceedings of the 16th European Biomass Conference and Exhibition from Research to Industry and Markets, Biomass for Energy, Industry and Climate Protection, Paper No. VP1.2.35 (VP1.2 Biomass Resources), Feria Valencia, Spain, 2-6 June 2008. [21] Abdeen M. Omer. 2008. Renewable building energy systems and passive human comfort solutions, Renewable and Sustainable Energy Reviews, Vol.12, No.6, p.15621587, United Kingdom, August 2008. [22] Abdeen M. Omer. 2008. People, power and pollution, Renewable and Sustainable Energy Reviews, Vol.12 No.7, p.1864-1889, United Kingdom, September 2008. [23] Abdeen M. Omer. 2008. Focus on low carbon technologies: the positive solution, Renewable and Sustainable Energy Reviews, Vol.12, No.9, p.2331-2357, United Kingdom, December 2008. [24] Abdeen M. Omer. 2008. Chapter 10: Development of integrated bioenergy for improvement of quality of life of poor people in developing countries, In: Energy in Europe: Economics, Policy and Strategy- IB, Editors: Flip L. Magnusson and Oscar W. Bengtsson, 2008 NOVA Science Publishers, Inc., p.341-373, New York, USA, 2008. [25] Abdeen M. Omer. 2009. Environmental and socio-economic aspect of possible development in renewable energy use, In: Proceedings of the 5th International Congress for South-East Europe on Energy Efficiency and Renewable Energy Sources, Sofia, Bulgaria, 6-8 April 2009. [26] Abdeen M. Omer. 2009. Environmental and socio-economic aspect of possible development in renewable energy use, In: Proceedings of the 4th International Symposium on Environment, Athens, Greece, 21-24 May 2009. [27] Abdeen M. Omer. 2009. Energy use, environment and sustainable development, In: Proceedings of the 3rd International Conference on Sustainable Energy and Environmental Protection (SEEP 2009), Paper No.1011, Dublin, Republic of Ireland, 12-15 August 2009. [28] Abdeen M. Omer. 2009. Energy use and environmental: impacts: a general review, Journal of Renewable and Sustainable Energy, Vol.1, No.053101, p.1-29, United State of America, September 2009. [29] Abdeen M. Omer. 2009. Chapter 3: Energy use, environment and sustainable development, In: Environmental Cost Management, Editors: Randi Taylor Mancuso, 2009 NOVA Science Publishers, Inc., p.129-166, New York, USA, 2009. [30] Omer, A. M. 2008. Energy demands for heating and cooling equipment systems and technology advancements. In: Natural Resources: Economics, Management and Policy, (2008) 131-165. [31] Abdeen M. Omer. 2008. Energy, environment and sustainable development, Renewable and Sustainable Energy Reviews, Vol.12, No.9, p.2265-2300, United Kingdom, December 2008.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 55-86

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 2

EFFICIENCY OF ECONOMIC ORGANIZATIONS AND PUBLIC POLICY INTERVENTIONS IN AGRICULTURE Hrabrin Bachev Institute of Agricultural Economics, Sofia, Bulgaria

ABSTRACT

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

There has been a fundamental development in theory and understanding of market, private, collective and public organizations in recent years. This paper incorporates achievements of the interdisciplinary New Institutional and Transaction Costs Economics (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences) and suggests a framework for assessing the needs and efficiency of economic organizations and public interventions in agriculture. Our new approach includes: study of farm and other agrarian organizations as a governing rather than production structure; assessment of comparative efficiency of alternative market, contract, internal, and hybrid modes of governance; analysis of level of transaction costs and their institutional (distribution and enforcement of de-facto rights between individuals, groups, organizations), behavioral (agents preferences, ability, bounded rationality, tendency for opportunism, risk aversion, trust), dimensional (frequency, uncertainty, assets specificity, and appropriability of transactions), natural, and technological factors; determination of effective horizontal and vertical boundaries of farms and other agrarian organizations; specification of the economic role of government and the needs for public interventions in agrarian sector; assessment of comparative of alternative forms of public involvement in agrarian sector (partnership, regulation, taxation, assistance, provision, in house organization, fundamental property rights modernization). The paper provides new powerful tools for understanding the agrarian organizations and their efficiency, and for improvement of public policies, collective actions, farming and business strategies, and academic analyses in that important sector of social life.



Correspondence should be addressed to Hrabrin Bachev, Institute of Agricultural Economics, 125 Tzarigradsko Shose Blvd., Blok 1, 1113, Sofia, Bulgaria, e-mail: [email protected].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

56

Hrabrin Bachev

Keywords: market, private and public modes of governance, efficiency of farms and agrarian organizations, agricultural policies, transaction costs, New Institutional Economics.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1. INTRODUCTION The problem of efficiency of economic organizations in general, and in agriculture in particular, has been among the most topical in academic, political, business and public debates in last several decades [Coase 1937; Eggertsson; Furuboth and Richter; Harvey and Sykuta; Sporleder; Williamson]. That issue has been especially important in transitional countries undertaking fundamental reforms in institutional and organizational structures of agrarian sector in the last 20 years [Csáki, C. and Lerman; Gortona and Davidova; Mathijs and Swinnen]. The problem of efficiency of agrarian organizations is usually simplified and limited to the ―productivity of resources‖ (―factors of production‖) in various types of farms. Moreover, comparisons are made of levels of efficiency across farms of different type, subsectors and countries independent to the specific economic, institutional or natural environment. Besides, question of efficiency is often politicized as unilateral priority given to a particular type of organization - free market, private farming, family farm, cooperative, public etc. In all this analysis, the public intervention is justified and called for to correct rare cases of market deficiencies – ―tragedy of commons‖, ―negative externalities‖, income disparities etc. Broadly applied traditional approach can not give an answer to the fundamental question: why there exist so many organizations of different type and size in a particular country, subsector etc. performing with a great variation in efficiency. For instance, in Bulgaria there have been highly sustainable ―inefficient‖ organizations throughout transition now such as unproductive subsistence and semi-market farms, production cooperatives with profitability several times lower than private farms, inefficient contractual arrangements etc. [Bachev 2010a]. Neither the traditional approach is able to assess the effective needs and forms for public intervention or explain numerous ―public failures‖ in the agrarian sector around the world. The New Institutional and Transaction Costs Economics is a new developing methodology which explains existence and efficiency of economic organizations with their role to maximize transaction benefits and minimize transaction costs [Coase 1937; Furuboth and Richter; Williamson]. Divers market, private, contract, public, and hybrid modes are considered as alternative governance (rather than production) structures – forms for governing relations between different agrarian agents in a specific market, institutional, technological and natural environment. This paper incorporates achievements of that new developing interdisciplinary concept (combining Economics, Organization, Law, Sociology, Behavioral and Political Sciences) into analysis of agrarian organizations, and suggests a framework for assessing the needs and efficiency of economic organizations and public interventions in agriculture. The ultimate goal is to assist the understanding of agrarian organizations and their efficiency, and provide new tools for improvement of public policies, collective actions, farming and business strategies, and academic analyses in that important sector of social life.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

57

2. WHY ARE THERE (SO MANY) ORGANIZATIONS IN AGRICULTURE?

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The Traditional Approach Broadly applied traditional approach for evaluating efficiency of economic organizations is based on the assessment of efficiency of production costs and productivity of employed recourses. Accordingly, a great number of indicators are used to express the efficiency of an organization through ―technical productivity‖ of factors (land, labor, capital etc.), rate of return (pay-back, profitability) on current and long-term expenditures etc. In more sophisticated (Neoclassical) models the criteria for assessment of efficiency of an organization is derived from the equilibrium condition of the entire economic system - when marginal benefits are equalized with the marginal costs [Pigou]. In such simplified world the entire activity of individual agents (producers, consumers etc.) is effectively governed (coordinated, stimulated) by the singe free market mode. As Eggertsson pointes out ―It is a central characteristic of welfare economics that outcomes derived from the basic neoclassical model are used as a criterion of efficiency. Outcomes that deviate from outcomes in model based on fully defined exclusive rights and costless transactions are called "inefficient" [Eggertsson]. According to the traditional approach, the organizations using recourses with different (higher, lower) from the marginal productivity are inefficient. For instance, if a farm has a higher productivity than the social level (employing resources more effectively than other organizations) but it does not further invest resources to explore the effective internal potential - then it is inefficient. Contrary, if a farm is performing with a lower productivity, it means that it integrates more recourses than it can effectively manage (which could be effectively used by others), and therefore it is inefficient. Furthermore, inefficiency of market and private modes is easily detected and effectively corrected though appropriate government interventions. Thus there is no economic rationality for market, private sector and/or public failures. The traditional approach does not answer the fundamental question: why there exist so many organizations with different productivity of resources utilization. If efficiency of a particular organization in low, there will always be a private or social mechanism (competition, public intervention) for reallocation of resources to more effective application optimization, specialization, extension, or liquidation of that organization. In a foreseeable long run there will exist only ―effective‖ organizations, which govern resources on (or close to) the socially acceptable level of efficiency. What is more, the traditional approach estimates different organizations without even looking for answering the question: why there exist so big variety (types) of economic organizations in agriculture - one-person farms, group farms, cooperatives, firms of different kind, subsistent farms, small and large farms, contractually or fully-integrated forms, public and hybrid modes etc.

The New Approach The New Institutional and Transaction Costs Economics explains existence of diverse economic organizations in agriculture with their role to govern transactions between

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

58

Hrabrin Bachev

individual agents and economize on transaction costs [Harvey and Sykuta; Sporleder]. Carrying out individuals exchanges (land and labor supply; marketing of output and services etc.) is usually associated with significant (transaction) costs. For instance, there are costs for studying and complying with various institutional requirements (laws, standards, informal norms); for finding best prices and partners; for negotiating conditions of exchange; for contract writing and registration; for enforcing negotiated terms through monitoring, controlling, measuring and safeguarding; for disputing, including through a third party (court system, arbitrage or another way); for adjusting or termination along with the evolving conditions of exchange etc. One of the fundamentals of the economic theory (and practices) is that division and specialization of labor, and related exchange and cooperation, open up enormous opportunities for increasing productivity and welfare of individuals and society. It let producing additional value (better resource management, bigger output, maximum economies of scale and scope) and creates incentives for deepening individuals specialization and exchanges. However, the specialization and exchange is also associated with additional (transaction) costs. The genial insight of Coase that there are ―costs of using the price mechanism‖ [Coase, 1937] reshaped fundamentally the modern economic thinking. The high costs of outside exchange make it more profitable to carry out division and cooperation of labor (a transaction) within an organization (firm, group farm etc.) instead across the market. For instance, a specialized livestock farm organizes internally a crop (forage) production activity (hiring additional labor and farmland) because of the significant costs and risks for market procurement of forage. Nevertheless, the internal management of transactions is also associated with costs (for directing, stimulating and supervising hired labor; for coordination and controlling activity of partners) which restricts unlimited expansion of the borders of an (internal) organization. Thus a transaction (activity) will be carried in an organization if the costs are lower than for governing that transaction across market or in another organization. Consequently, the distribution of overall (agrarian) activities between different farms, agrarian organizations, and markets will be determined by the comparative costs for using various governing arrangements as the most efficient one(s) (minimizing internal and external transaction costs) will tend to prevail [Bachev 2004]. Ultimately, emergence, existence, evolution and the size of any free choice (contractual) economic, professional, political etc. organization could be explained by transaction cost minimizing (rather than technological) reason [Williamson]. The ―discovery‖ of transaction costs significantly changed the way the economic problem (the ―effective allocation of resources‖) is addressed and solved. As Dahlman underlines it: ―Indeed it is obvious that once there is shift from a ―frictionless‖ universe scare resources have to be used to effect transactions, protect property rights and so on. This means that system‘s total resource endowment can no longer be devoted solely to the production of normal commodities‖ [Dahlman]. Thus, the economic efficiency of agrarian organizations should take into account not only their capacity to minimize production costs, but also their ability to economize on transaction costs. While the production costs could be defined as cost associated with proper technology (―combination of production factors‖) of certain farming, servicing, environmental conservation etc. activity, the transaction costs are the costs for governing the economic and

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

59

other relations between individuals (for coordination of activity, for protection and exchange of various rights etc.). Moreover, both (current) costs for using the individual economic organizations and the long-term costs for their development (initiation, maintenance, modernization, liquidation) have to be taken into account [Bachev 2004]. If execution of activity and exchange was not associated with transaction costs (―world of zero transaction costs‖) then the mode of organization would have no economic importance [Coase; Williamson]. Individuals would govern their relationships with the same (equal) efficiency though free market (adapting to price movements), and private modes of different types (contracts, firms), and collective decision making (cooperative, association), and in a nationwide hierarchy (a single private or state company). Then technological opportunities for economies of scale and scope (the maximum productivity of resources, ―internalization of externalities‖) would be easily achieved [Coase 1960]. All information for the effective potential of transactions (optimization of resources, meeting various demands, respecting assigned and transferred rights) would be costlessly available to everybody, and individuals would costlessly define new rights, and protect their (absolute1 and contracted) rights, and trade owned resources (and products) in mutual benefit until exhausting the possibilities for increasing productivity (situation known as ―Pareto optimum/efficiency‖). However, often the high transaction costs make it difficult or block otherwise efficient (mutually beneficial) for all parties activity and exchange. For instance, despite the great payoff of investments in agrarian research and innovation, the market and private agents do not organize such activity in a sufficient scale because of their high uncertainty and low market and private appropriability [Bachev and Labonne]. Since carrying out agrarian activity is connected with transaction costs, the rational agent will seek, chose, and develop such modes for organization of his activity and exchanges which maximize his transacting benefits and minimize associated costs. The type of economic organization becomes crucial since various forms give unequal possibilities for participants to explore technological opportunities (economies of scale and scope, non-separability of activity), coordinate and adapt transactions, stimulate an acceptable behavior of others (counterparts, dependents), protect their rights and investments from unwanted expropriation. Therefore, in the long-run inefficient forms will be abandoned and only effective modes for organization of agrarian activity and exchange will dominate. Transaction costs minimizing helps us understand the reason of emergence and the efficiency of a great variety of agrarian organizations in the modern world – the economic boundaries of farms (―make of buy decision‖; the extend of internal division and specialization, and product diversification); divers contractual arrangements and type of coalitions (partnerships, firms, cooperatives); economic needs for cooperation with competitors (in inputs supply, marketing, lobbying etc.) or vertical (downstream, upstream) counterparts; joint ventures; pace and limits of development of agrarian markets etc. What is more, the efficiency of a particular organization can hardly be assessed without analyzing the efficiency of complementary and/or competing organization(s). For instance, the ―high‖ efficiency of small-scale farms and the producers (inputs supply, marketing) organizations in most countries cannot be properly evaluated without analyzing their high

1

determined by dominating institutional environment [Furuboth and Richter].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

60

Hrabrin Bachev

complementarities2. Furthermore, depending on the dominating public organizations (public provision, support measures, tax preferences etc.), the individual market and/or private organizations would have quite dissimilar efficiency for different agrarian agents.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Factors for Organizational Choice Different governance forms are alternative but not equal modes for organization of transactions - they have different features (advantages and disadvantages) to coordinate, control, and stimulate (maximize benefits of, minimize costs on) transactions [Williamson]. The free market has a big coordination and incentive advantages (―invisible hand of market‖, ―power of competition‖), and provides ―unlimited‖ opportunities to benefit from specialization and exchange. However, market governance could be associated with a high uncertainty, risk, and costs due to price instability, great possibility for facing an opportunistic behavior, ―missing market‖ situation etc. The special contract form (―private ordering‖) permits a better coordination, intensification, and safeguard of activity. However, it may require large costs for specification of contract provisions, adjustments with constant changes in conditions, enforcement and disputing of negotiated terms etc. The internal (ownership) organization allows a greater flexibility and control on activity (direct coordination, adaptation, enforcement, and dispute resolution by a fiat). However, extension of internal mode beyond family and small-partnership boundaries (allowing achieving the minimum technological or agronomic requirements; exploration of technological economies of scale and scope) may command significant costs for development (initiation and design, formal registration, restructuring), and for current management (collective decision making, control on coalition members opportunism, supervision and motivation of hired labor etc.). Besides the transaction costs, the choice of economic organization depends on a number of additional factors (Figure 1): 

2

personal characteristics of individual agents – preferences, ideology, knowledge, capability, training, managerial experience, risk-aversion, reputation, trust, power etc. For instance, farming organization is often restricted to a family partnership. In some cultures, the cooperative is the preferred mode of agrarian organization. If farmer is a good manager he will be able to design and control a bigger organization managing effectively more internal (labor) and outside (market and contract) transactions. A risk-taking farmer will prefer more risky but productive forms - e.g. bank credit for a new profitable venture). When counterparts are family members (or close friends) there is no need for complex organization since relations are easily ―governed‖ by the good will and mutual interests of parties. Benefits for farmers could range from monetary or non-monetary income; profit; indirect revenue; pleasure of self-employment or family enterprise; enjoyment in agricultural

e.g. the high efficiency and sustainability of small scale subsistence and semi-market farms, and production cooperatives in transitional Bulgarian agriculture [Bachev 2004].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…



Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.



61

activities; desire for involvement in environment, biodiversity, or cultural heritage preservation; increased leisure and free time; to other non-economic benefits3. 4 formal and informal institutions (“rules of the game”) . Often the choice of governing mode is (pre)determined by the institutional restrictions as some forms for carrying farming activities, land and labor supply, trade of output etc. could be 5 socially unacceptable or illegal . For instance, corporate and cooperative organization of farming is forbidden in many countries; market trade of farmland, natural resources, and some outputs (inputs) is illegitimate, private management of natural ecosystems (parks, reserve zones) is not allowed etc. What is more, the 6 institutional environment considerably affects the level of transaction costs and thus the choice of one or another economic organization. In conditions of well-working public system of regulations (quality standards, price guarantees) and laws and contract enforcement, a preference is given to spotlight and classical (standard) contracts. On the other hand, when rights on major agrarian resources are not defined or not well defined, and absolute and contracted right effectively enforced, that lead to domination of primitive subsistence farming, informal, personal and overintegrated forms, unsustainable organizations, undeveloped and missing markets etc [Bachev 2004] natural and technological factors. In rare cases there is only one practically possible form for governance of agrarian activity. For example, in Japanese dispersed paddy agriculture water supply could not have been conducted by individual farmers (high interdependency, nonseparability of water use) and since earliest period water use organization developed as a public project [Mori]. An effective governance of some environmental activities also requires a certain scale and thus collective actions at local, regional, national or transnational scale [Bachev 2010a]. However, beside few examples, in farming is almost impossible to find cases where the form of governance is unilaterally determined by the natural and/or technological parameters7.

3

A ―desire for preservation of farm for future generation‖ has been a major reason for the persistence (sustainability) of a great number of part-time farms in Japan [Bachev and Tsuji]. 4 that is the distribution of rights and obligations between individuals and groups, and the system(s) of enforcement of these rights and rules [North]. The spectrum of rights could embrace material assets, natural resources, intangibles, certain activities, labor safety, clean environment, food security, intra- and inter-generational justice etc. A part of the rights and rules are constituted by the formal laws, regulations, standards, court decisions etc. In addition, there are important informal rules and rights determined by the tradition, culture, religion, ideology, ethical and moral norms etc. The enforcement of various rights and rules is done by the state (administration, court, police) or other mechanisms such as community pressure, trust, reputation, private modes, self-enforcement etc. 5 Nevertheless, when costs associated with the illegitimate governance is not high (possibility for disclosure low, enforcement and punishment insignificant) while benefits are considerable, then the more effective modes prevail – large gray or black sectors of the economy are common in agriculture around the globe. 6 A good example in this respect are current problems of many Bulgarian farms to meet the new EU requirements (―institutionally determined‖ costs) related to new product quality, food safety, labor, environmental, animal welfare etc. standards [Bachev 2010a]. 7 Exploration on technological economy of scale and scope is usually pointed out as a factor determining type of organization. However, development of technology commonly follows demand and is a changeable parameter as well. Besides, the maximum economy of size and scale can be reached through a market exchange with a specialized activity and/or resources rather than integrating transactions.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

62

Hrabrin Bachev

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 1. Factors affective organizational choice in agriculture.

Nevertheless, technological development affects enormously the structure and level of transaction costs [North]. For instance, mechanization and standardization of farming operations (products) increases manageability and leads to extension of activities under a singe management enlarging internal (internal division and specialization of labor) and outside (market and contract procurement, trade, cooperation) transactions8. Furthermore, the possibilities that progression of modern production (e.g. precision farming), transportation, measurement, information, communication etc. technologies gives to coordinate and intensify transactions and minimize related costs are immense - easy assessment and traceability; on line information, coordination, monitoring, detecting, advise; direct low costs exchanges (expressing demands, finding best prices and partners, negotiating, trading, disputing) and collective actions (coalitions) of interested agents at national and international scales; rapid detection of problems and interventions by governments and international agencies; full participation of individuals in and control on public decision-making etc. Each activity (transaction) has different specific dimensions varying according to the specific institutional environment (legislation, efficiency of laws and contract enforcement, diverse informal restrictions), personal characteristics of agents (preferences, experience, reputation, tendency for opportunism, risk aversion), macroeconomic conditions (stability, foreign trade regime, available public support), dominant technologies (mechanization and standardization of operations, application of information technologies), and natural environment (recourses endowment, dependency) etc.

8

However, that enormous technological potential meets the restrictions of imperfect institutional arrangements which eventually slow-sown technological progress, impede individual market and private transactions, allow particular agents to benefits from the status-quos, and lead to unsustainable ―development‖ [Bachev 2010a].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

63

There exist no singe most efficient (universal) form for organization of all agrarian activity in all practically possible economic, institutional and natural settings. According to the critical dimensions of activity and exchange the individual agents will (tend to) use the most appropriate (effective) mode for governance. Hence, in any particular moment the agrarian activities will be carried out (governed) through a great variety of economic organizations: some will be governed by the “invisible hand of market”, some will be carried out through a special contract mode (―private order‖), some will be managed within hierarchy (under "visible hand of manager"), some will be supported by a third party (Government, NGO`s, international assistance), some would require more complicated and mixed modes [Bachev 2004]. Consequently, it must be abandoned commonly used (Nirvana) approach for evaluating different forms as ―good‖ or ―bad‖ for their own or in a comparison with some non-feasible (ideal, institutional and transaction costs free, in other countries etc.) model. The evaluation is to be directed to finding out the comparative advantages for initiating, establishing, using, management, adaptation, intensification, coordination, stimulation and controlling (in short for minimization of overall costs) of the alternative (and really possible) modes of governance in the specific market, institutional, technological and natural environment. For instance, in post-communist transitional conditions of not well-defined and assigned private rights on farmland, and the high costs for their protection and exchange, the shortterm lease and the internal integration (subsistence and semi-market farming, production cooperation) were the most efficient forms for organization of land supply in Bulgarian agriculture [Bachev and Tsuji]. The evaluation of efficiency of agrarian organizations has to include not only the comparative “productivity” of resources, but analyses of the level and structure of comparative transacting costs. Besides, it should identify the factors of transaction costs in a nationwide (social) scale, which eventually slow down sustainable growth of agriculture, and lead to insufficient and unsustainable use of resources, underinvestment and low productivity in production, wide-spreading of primitive technologies, lack of innovations etc [Bachev 2004].

Public Policy Implications The recognition of transaction costs has also a number of important policy implications related to economic needs and efficiency of public intervention in agrarian sector: First, public (government) role is to establish organizations facilitating and intensifying market and private transactions and minimizing related costs - for identification, protection, and disputing individual absolute and contracted rights (e.g. notary register, court, police etc.); quality, labor, environmental etc. standards; appropriate market infrastructure (wholesale markets, market and price information) etc. Second, when a high level of costs for market and private transactions (which prevent or entirely block development of effective market and private forms) is observed then public (government) is to intervene to make that socially desirable activity (and exchange) possible or more efficient. Third, different forms of public intervention (assistance, regulations, funding, provision, partnership) are not with equal efficiency since they have different potential to deal with the

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

64

Hrabrin Bachev

specific market and private sector failures and command different (implementation and transaction) costs. Thus, the comparative efficiency of feasible forms of public intervention is to be assessed and the most efficient one selected. Forth, ―market failure‖ does not automatically imply a public intervention. There are numerous private and collective forms which effectively overcome market deficiency. When there is a situation of market and private sector failure there is a need for public intervention. However, public involvement in market and private activity is to be undertaken only if there is a net benefit (saving on transaction costs) compared to total costs of public intervention. Therefore, the choice is always between practically available ―imperfect social arrangements‖. Finally, ―public failure‖ is a feasible outcome and when there is a need for public intervention the induced public organization is not always efficient due to misuse of power by certain groups, bad design, mismanagement etc. .

3. STEPS IN ANALYSIS OF AGRARIAN ORGANIZATIONS The Basic Unit of Analysis

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The New Institutional and Transaction Costs Economics turns the individual transaction and the costs associated with it into a center of the economic analysis [Williamson]. Following that new approach first, we have to determine the major type of transactions in which the agent managing agrarian activity (farm entrepreneurs, farmers) participates (Figure 2).

Figure 2. Steps in analysis of economic organization in agriculture. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

65

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Second, we are to identify the alternative (feasible) forms for governing of agrarian transactions. Third, we have to specify factors of transaction costs, and the costs (and benefits) associated with the alternative modes of economic organization. Fifth, we are to assess the comparative efficiency of alternative modes, and define the effective boundaries of market and private organizations. Six, we have to identify cases of market and private failures, and the needs for public intervention in agrarian sector. Seven, we have to identify the alternative (and feasible) forms for public intervention in agrarian sector. Finally, we have to assess the comparative efficiency of alternative modes of public intervention, and select the best one(s). The main types of transactions of a farm entrepreneur are associated with the supply of ―factors‖ of production and the marketing of farm output and services. Actually, the farm manager manages not (production) technology but transactions related to agricultural production. It is not a hypothetical case when an entrepreneur is entirely engaged in managing agrarian transactions rather than farming activity. The major types of transactions in farming are commonly associated with:         

labor supply supply of land and other natural resources service supply inputs supply knowledge supply innovation supply finance supply insurance supply marketing of services and products

In addition, the farm entrepreneur takes part in a great variety of collective actions for inducing public (Government) intervention in market and private sector in his own interests. [Bachev 2010a]. Usually, every agrarian activity and exchange could be governed through a great variety of alternative forms. One extreme for the farm manager is to specialize exclusively in governing of market transactions rather than production management. For example, leasing-in farmland and long-term material assets, purchasing all services for cultivation and harvesting of output, buying needed short-term material assets, selling all primary products on market. Another extreme is a close internal organization such as one-person or group subsistent farm – the farmer(s) employ only own resources (land, labor, technological knowledge) and consume the entire product. Between these two polls there is a spectrum of feasible modes for governing of agrarian activity and exchange: various sort long-term contracts, association, cooperation, interlinked organization, hybrid forms, farms of different type (partnerships, corporations, complex hierarchies) etc.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

66

Hrabrin Bachev

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

For instance, cultivation of land by a tractor can be governed in numerous ways: a farmer can buy (unified ownership), rent (rent contract) or lease a tractor (input and credit supply interlinked contract); farmer could buy cultivation service from market (contract service); a number of farmers may buy a tractor (joint ownership) and use it in a group (producers cooperative) or individually; a farmer can join a cooperative providing cultivation services (non for profit organization); a farmer may lease the land out to a tractor owner and share the output (share tenancy contract); a farmer can hire a tractorist to work on farm (employment contract), and may even sell out the cultivation service to market (profit making organization); cultivation service to farms could be subsidized by the Government (trilateral mode), or provided by a municipality or a state company (public organization). Identification of practically employed or other feasible specific forms for organizations of transactions in different countries, regions, subsectors etc. is object of a special microeconomic survey. For instance, major forms for organizations in functional areas of Bulgarian farms are summarized on Figure 3.

Figure 3. Principal forms of organizations for functional areas of Bulgarian farms. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

67

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

“Measurement” of Transaction Costs One direction for evaluation of efficiency of agrarian organizations is the direct comparison of costs for each transaction in different forms. The organization which requires less costs is more efficient. For instance, a comparison is made whether would be more economical to marketing of output directly or to use a marketing cooperative. Data for some part of transaction costs can be found in traditional statistics and accountancy (e.g. management costs, marketing costs, insurance etc.). Another part of the transaction costs may be easily specified – e.g. costs for licensing and registration, agromarket information, promotion and marketing of output, general management, hiring lawyers and court suits, guarding property and yields, payment of bribes etc. However, a significant portion of the transaction costs is either very difficult (too expensive) or impossible to be determined. In that group we can include the costs for finding best partners, negotiation, controlling and enforcement of contractual terms, organizational development, interlinked transacting, unrealized (failed) deals etc. Besides, it is often extremely complicated to separate transaction costs from the 9 traditional production expenditures . For example, while executing farming operations a farmer supervises the hired labor; during transportation of chemicals he negotiates the marketing of output etc. Approximate estimate for the level of transaction costs could be made by interviewing farm managers. Here it is essential to indicate the level (high, low) of efforts and time devoted for governing different type of transactions: for finding needed labor for hiring, land and material inputs for purchase and lease-in; negotiating terms of exchange; monitoring implementation of contractual obligations; current adaptation of contracts to emerging new conditions; conflicts resolution; memberships in professional organizations; relationships with agrarian bureaucracy etc. Nevertheless, a component comparison of the transacting costs could not always give idea for the efficiency of organizations. Very often the alternative form decreases one type of costs while increasing another type transacting costs – e.g. internalization of a transaction (replacement of market with integral mode) is associated with the reduction of costs for information supply (overcoming market uncertainty), permanent (re)negotiations along with constantly changing conditions, and safeguarding investments from the outside opportunism. On the other hand, it enlarges costs for the organizational formation, decision making, integral management, supervising and motivation of hired labor etc. In our previous example with the alternatives for marketing of farm output the ―internal realization‖ (personal consumption, production ―consumption‖, processing) could be chosen as more efficient form to the direct sell or use of an marketing cooperative. Moreover, a good part of transactions in agriculture is governed not by ―pure‖ but through complex or interlinked modes - e.g. inputs supply in a ―package‖ with know-how, extension or/and service supply; a joint supply of inputs and credit; crediting of production against marketing of output etc. Thus, it is important to take into consideration the overall (total) costs for organization of transactions of different types - all external and internal transaction costs of the farm [Bachev 2004]. 9

All these ―measurement problems‖ make it impossible to extend the traditional Neoclassical models simply by adding a new "transacting" activity [Furuboth and Richter].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

68

Hrabrin Bachev

Often it is difficult to select a base for comparison in view that the high transacting costs entirely block development of an alternative organization. For instance, markets for agrarian credit did not emerged in Bulgaria during most of the transition and the internal supply (utilization of own finance, direct outside co-investment) was the only possible form for finance supply of farms [Bachev and Tsuji]. Here the comparative level of transaction costs is impossible to be determined and appreciate the ―high‖ efficiency of the integral mode for financing. In that case funding with ―own means‖ and with ―bank credit‖ are not real alternative at all but completely different governing structures. Thus, broadly applied indicators for estimation of comparative efficiency of investments based on ―opportunity costs‖ (discounting, payback period, internal rate of return) independent from the form of funding, have no significant economic sense.

Factors of Transaction Costs

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Another direction for evaluation of the efficiency is the Discrete structural analysis of alternative economic organizations [Williamson]. Since it is either very difficult or impossible to determine the transaction costs for individual mode, the assessment is made on the comparative costs of alternative organizations. Besides, the quantitative approach (the absolute and relative measures, marginalism) is replaced by the qualitative (structural) analysis and indirect assessment of transacting costs. Actually, we are interested not in the absolute level of transaction costs in different form, but in organization with the lowest comparative costs for a particular transaction (activity). Initially we have to identify the critical factors of transactions in the specific market, institutional and natural environment. These factors are responsible for the variation of transacting costs and are associated with:  

the behavioral characteristics of agrarian agents such as bounded rationality, tendency for opportunism, reputation building, risk taking, level of trust, etc.; the economic dimensions of individual transactions such as frequency, uncertainty, assets specificity, and appropriability.

The transaction costs have two behavioral origins: individual‘s bounded rationality and opportunism [Williamson]. Agrarian agents do not possess full information about the economic system (price ranges, demands, trade opportunities, development trends) since collection and processing of such information would be either very expensive or impossible (for future events, partners intention for cheating). In order to optimize the decision-making they have to spent costs for ―increasing imperfect rationality‖ – e.g. data collection, analysis, forecasting, training etc. Furthermore, the economic agents are given to opportunism. Accordingly, if there is opportunity for some of transacting sides to get non-punishably an extra rent from the exchange he will likely do so. Two major forms of opportunism can be distinguished: precontractual ("adverse selection") - when some of the partners use the "information asymmetry" to negotiate better contract terms; and post-contractual ("moral hazard") - when

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

69

some counterpart takes an advantage of impossibility for full observation on his activities (by another partner or by a third party) or when he takes "legal advantages" of unpredicted changes in transacting conditions (costs, prices, regulations etc.). A special third form of opportunism occurs in development of larger organizations [Olson]. Since individual benefits are often not proportional to the individual efforts, everybody tends to expect others to invest the costs for organizational development, and to benefit ("free ride") from the new organization. It is very costly or impossible to distinguish opportunistic from non-opportunistic behavior (because of the bounded rationality). Therefore, agrarian agents have to protect their transactions from the hazard of opportunism through: ex ante efforts to find a reliable counterpart and to design efficient mode for partners credible commitments; and ex post investments for overcoming (through monitoring, controlling, stimulating cooperation) of possible opportunism during contract execution stage [Williamson]. In addition, the transaction costs depend on ―critical dimensions‖ of each transaction. When recurrence of transactions between the same partners is high, both (all) sides are interested in sustaining and minimizing costs of their relations (avoiding opportunism, building reputation, setting up incentive and adjustment mechanisms, conflict resolution devices etc.). Here continuation of the relations with a particular partner and designing a special mode for transacting has a high economic value. Parties restrain for opportunism which detection is ―punished‖ by turning to a competitor (losing future business). Besides, costs for development of a special private mode for facilitating bilateral (or multilateral) exchange could be effectively recovered by frequent exchange. When a transaction is incidental then possibility for opportunism is great since cheating side can not be easily punished (good reputation is not of value). Transaction costs become very high (and may block transacting) when low frequency coincides with high uncertainty and requirement for large relation-specific investments. When uncertainty, which surrounds transactions increases, then costs for carrying out and secure the transactions go up (for overcoming information deficiency, safeguarding against risk etc.). Since bounded rationality is crucial and opportunism can emerged agrarian agents will seek, develop, and use such modes of organization which diminish transaction uncertainty. While certain risks could be diminished or eliminated by a production management or through a special market mode (e.g. purchase of insurance) most transacting risk would require a special private forms – e.g. trade with origins; providing guarantees; using share-rent or output-based compensation; employing economic hostages; participating in a risk-pooling, inputs-supply or marketing cooperative; a complete integration. There are strong mutual incentives to develop a special form for repeated transacting when high uncertainty is combined with significant relation specific investments. When transacting between same counterparts is rare, and it is not supported by specific assets, and appropriability of rights is high, then faceless (autonomous) market exchange is the most efficient mode. Depending on the levels of uncertainty and the risk aversion agrarian agents will take different entrepreneurial risk and will get normal, low or above the average rate of return from the transactions.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

70

Hrabrin Bachev

The transaction costs get very high when specific assets for the relations with a particular partner are to be deployed10. In this case it is impossible to change a partner of transaction (alternative use of assets) without a big loss in value of the specific capital. The relation specific (dependent) investments are "locked" in transactions with a particular buyer or seller (the personality of the partner matters), and cannot be recovered through a "faceless" market trade. A costless redeployment (alternative use) of the specific assets is not possible if transactions fail to occur, they are prematurely terminated, or less favorable terms are renegotiated (in contract renewal time and before the end of the life-span of specific capital). Therefore, dependant investment (assets) have to be safeguarded by a special form such as a long-term or tied-up contract, interlinks, hostage taking, joint investment, quasi or complete (ownership) integration. Often, the later is quite expensive, the investment in specific capital are not made, and the activity either can not take place or occurs without (or loss of) comparative advantages in respect to productivity If a symmetrical assets dependency (regime of a bilateral trade) exists there are strong incentives in both parties to elaborate a special private mode of governance. However, when unilateral dependency exists then the dependent side (facing mini or total monopoly) has to protect investments against possible opportunism (behavioral uncertainty or certainty) either through integrating transactions (unified organization, joint ownership, cooperative); or safeguarding them with interlinked contract, exchange of economic hostages, development of collective organization to outstand asymmetrical dependency (for price negotiation, lobbying for Government regulations) etc. Serious transacting problems arise when the condition of assets specificity is combined with a high uncertainty and a low frequency of transactions. In this case the elaboration of a special governing structure for private transacting is not justified (set up costs can not be recovered by occasional transaction). The specific investments are not made and the transactions (and activity supported by them) fail to occur. Therefore, a third party involvement (local authority, Government agency, NGO, hybrid organization) in individual transacting (through assistance, arbitration, regulation) is crucial for smooth organization of such transaction. The activity and transacting is particularly difficult when appropriability of rights on products, services or resources is low. "Natural" low appropriability has most of the agrarian intellectual products - agro-market information, agro-meteorological forecasts, new varieties and technologies, software etc. Besides, all products and activities with significant (positive or negative) externalities are to be included in this group [Bachev and Labonne]. If appropriability is low the possibility for unwanted (unequal) market or private exchange is great, and the costs for protection (safeguard, detection of cheating, disputing) of private rights and investments extremely high. Because of the bounded rationality, the costs for protection, detection, verification, and a third-party (e.g. court) punishment of unwanted exchange (non paying consumers-opportunists) extremely high. For transactions with low appropriability the costs and benefits are independent for individual participants. Therefore, agents would either over produce (negative externalities) 10

Specificity is not a technological but transacting characteristic of assets. In one situation a particular capital (investment) could be highly universal (an easy deployment to another internal usage or outside trade) while in others - highly specific (a big dependency from the relations with a certain counterpart (buyer, seller, coalition partner).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

71

or under organize such activity (positive externalities) unless they are governed by an efficient private or hybrid mode - cooperation, strategic alliances, long-term contract, trade secrets, or public order. Principally, when the appropriability associated with a transaction is low, there is no pure market mode to protect and carry out that activity effectively. Nevertheless, the respecting others rights (unwanted exchange avoided) or ―granting‖ additional rights to others (needed transactions carried) could be governed by a ―good will‖ or charity actions. For instance, a great number of voluntary environmental initiatives have emerged driven by the competition, farmers‘ preferences for eco-production, or responds to public pressure for a sound ecomanagement [Bachev 2010a]. In any case, voluntary initiatives could hardly satisfy the entire social demand especially if they require significant costs. If appropriability is low and transactions are strongly specific (for a particular customer), the only way to carry them out is to integrate transactions (in house production, trade secrets) or elaborate the effective form for securing a credible commitment (joint investments, interlinks). Some private modes could be employed if a high frequency (a pay-back on investment is possible) and a mutual assets dependency (thus incentive to cooperate) exists11. In these instances, unwritten accords, interlinking, bilateral or collective agreements, closemembership cooperatives, codes of professional behavior, alliances, internal organization etc. are used. Serious transaction difficulties occur (and may block transacting) when they are associated with low appropriability but require significant specific or universal investments, and are characterized with low frequency and high uncertainty12. The incidental character of transactions between same agents makes the designing and maintenance costs for a special (private, collective) large-members organization for dealing with low appropriability very high (―free-riding‖ problem). Thus, there is a strong need for a ―third-party‖ public (Government, local authority, international assistance) intervention in order to make such activity possible or more effective – public organization, public contracts, mandatory fees, introduction of new property right etc.

Principle Modes for Effective Organization Next step is to evaluate the effective potential of alternative economic organizations: to minimize bounded rationality of agrarian agents and uncertainty surrounding transactions; for appropriation and protection of absolute and contracted rights (and associated private benefits and investment) from possible opportunism; to recover long-term costs for organizational development through a high frequency of transactions; to explore economy of size and scale on specific capital etc. Individual organizations have different comparative advantages and disadvantages to maximize benefits and minimize costs of transactions with specific critical dimensions.

11

12

For instance, inter-dependency between a dairy farm and a milk processor in a remote region (capacity and site dependency); or a bee-keeper and a neighboring orchard farm (symmetric dependency between needs of flower and needs for pollination). That is when a pay-back on investment requires ―mass‖ consumption and ―collective appropriation‖ of benefits (and risk taking).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

72

Hrabrin Bachev

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

In general, the internal organization has advantage for governing transaction with high uncertainty and specificity (dependency) of assets, since it diminishes the bounded rationality and protects investments from outside opportunism. Contrary, transactions with high certainty (bounded rationality is not important) and universal character of assets (opportunism can not be realized since transaction can be executed with another partner without additional costs) can be carried across free market without encountering costs for development of a special private mode. Private organization is effective only for transactions with high recurrence between partners, since occasional (single) transactions do not let recovering ("payback" on) investment for development of a special governance mode (mechanisms for coordination, stimulation, dispute resolution; formal registration etc.). Finally, markets and private forms are appropriate for transactions with high appropriability, since they would recover invested resources through exchange. For transaction with a low appropriability the private rights cannot be protected or they are enforced with extremely high costs. Thus, such transactions could be effectively governed either by hybrid (mixed public-private, quasi-public) or the entirely public forms for organization. Since transactions have different critical dimensions and the governance forms have different comparative advantages the operationalisation of the concept is done by: “aligning transactions (which differ in their attributes) with governance structures (which differ in their costs and competence) in discriminating (mainly transaction cost economizing) way” [Williamson]. According to the combination of the specific characteristics of each activity and transaction, there will be different the most effective form of economic organization for that particular activity (Figure 4).

 - The most effective mode;  - a necessity for a third party involvement. Figure 4. Principle modes for governing of agrarian transactions 13.

13

Differences in personal characteristics of agents are disregarded. Only extreme levels (high-low) of the critical factors are considered. In the real agrarian economy there is a big variation of critical dimensions, and thus of the effective governing forms (including mixed, hybrid, interlinked etc. governance).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

73

Agrarian transactions with a good appropriability, high certainty, and universal character of investments (the partner can be changed anytime without significant additional costs) could be effectively carried across free market through spotlight or classical contracts. Here the organization of transactions with a special form or within the farm (firm) would only bring extra costs without producing any transacting benefits. Recurrent transactions with low assets specificity, and a high uncertainty and appropriability, could be effectively governed through a special contract. The relational (‖neoclassical‖) contract is applied when detailed terms of transacting are not known at outset (a high uncertainty), and a framework (mutual expectations) rather than a specification of obligations is practiced. Partners (self)restrict from opportunism and are motivated to settle emerging difficulties and continue relations (situation of a frequent bilateral trade). Besides, no significant risk is involved since investments could be easily (costlessly) redeployed to another use or users (no assets dependency exist). A special contract forms is also efficient for rare transactions with a low uncertainty, high specificity and appropriability. Dependent investment could be successfully safeguarded through contract provisions since it is easy to define and enforce relevant obligations of partners in all possible contingencies (no uncertainty surrounds transactions)14. Here the occasional character of transactions does not justify internalization within the farm (firm). Transactions with a high frequency, uncertainty, assets specificity (dependency), and appropriability, have to be organized within the farm/firm (internal ownership mode). For instance, managerial and technological knowledge is quite specific to a farm, and its supply has to be always governed through a permanent labor contract and coupled with the ownership rights [Bachev 2004]. Capital investments in land are to be made on owned (or long-leased-in) rather than a seasonally rented land (high site and product specificity). All ―critical‖ to the farm material assets will be internally organized - production of forage for animals; important machineries; water supply for the irrigated farming etc. While universal capital could be effectively financed by a market form (e.g. a bank credit), the highly specific investments can be only made through an internal funding (own funds, equity sell, joint venture). If the specific and specialized capital cannot be effectively organized within the farm (economy of scale and scope explored, funding made)15, then an effective governing form outside farm-gates is to be used - group farming, joint ownership, interlinks, cooperative, lobbying for a public intervention. When a strong assets (capacity, technology, time of delivery, site, branding) interdependency with an upstream or downstream partner exists, then it is not difficult to govern transactions through a contract mode (strong mutual interests for cooperation and restriction of opportunism). For instance, effective supply (procurement) contracts between farmers and processors are widely used in dairy, meat, vine, organic industries (symmetrical dependency). However, very often farmers face unilateral dependency and need an effective (ownership) organization to protect their interests. Transacting costs for initiation and maintaining of such ―collective organization‖ is usually great (a big number of coalition, different interests of members, opportunism of ―free-riding‖ type) and it is either 14 15

Practically it is difficult (costly) or impossible to write a complete contract for complex transaction [Williamson]. Integration of transactions would either increase management costs (needs to buy from or sell to a competitor) or it would be loss-making comparing to outside production costs (price) competition.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

74

Hrabrin Bachev

unsustainable or does not evolve at all. That creates serious problems for the efficiency (and sustainability) of individual farms - missing markets, monopoly or quasi-monopoly situation, impossibility to ―induce‖ a public intervention etc. Serious transacting problems arise when condition of assets specificity is combined with a high uncertainty, low frequency, and good appropriability. Here the elaboration of a special governing structure for private transacting is not justified, specific investments are not made, and activity (or restriction of activity) fails to occur at an effective scale ("market failure" and "contract failure"). Similar difficulties are also encountered for rare transacting associated with a high uncertainty and appropriability. In all these cases, a third part (private agent, NGO, public authority) involvement in transactions is necessary (through assistance, arbitration, regulation) in order to make them more efficient or possible at all. A particular trilateral mode is invented such as the neoclassical contract which arranges the ―third party participation16 and manages transactions with high uncertainty and asset specificity, and low frequency. Emergence and unprecedented development of organic farming, and systems of trade with origins and ―fair-trade‖ are all good examples in that respect. There is an increasing consumer‘s demand (a price premium) for organic, original, and fair-trade products in many countries. Nevertheless their supply could not be met unless effective trilateral governance (including an independent certification and control) has been put in place. When appropriability associated with a transaction (activity) is low, there is no pure market mode to protect and carry out activity effectively. Transactions with such characteristics could only be governed by a ―good will‖ or charity actions of individual agents, NGOs etc. Some private modes could be employed if a high frequency (a pay-back on investment is possible) and a mutual assets dependency (thus an incentive to cooperate) exists. In all these instances, unwritten accords, interlinking, bilateral or collective agreements, closemembership cooperatives, codes of professional behavior, alliances, internal organization etc. are used. However, emerging of special (private) large-members organizations for dealing with low appropriability (and satisfying the entire ―social‖ demand) would be very slow and expensive, and they unlikely be sustainable in a long run (―free riding‖ problem). Therefore, there is a strong need for a third-party public (Government, local authority, international assistance etc.) intervention in order to make such activity possible or more effective [Bachev 2004]. For example, supply of environmental goods by farmers could hardly be governed through private contracts with individual consumers because of low appropriability, high uncertainty, and rare character of transacting (high costs for negotiating, contracting, charging all potential consumers, disputing). At the same time, the supply of additional environmental protection service is very costly (in terms of production and organization costs) and would unlikely be carried out on a voluntary basis. Besides, the financial compensation (pricepremium) of farmers by willing consumers through a pure market mode is also ineffective due to the high information asymmetry, massive enforcement costs etc. A third-party mode with a direct public involvement would make that transaction effective: on behalf of the consumers the State agency negotiates with individual farmers a public contract for ―environment conservation and improvement service‖, coordinates activities of various agents 16

in verification wine grades, certification of special (eco, fair-trade, origins etc.) products etc.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

75

(including a direct production management), provides public payments for compensation of farmers, and controls implementation of negotiated terms.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

4. ECONOMIC BOUNDARIES OF FARM AND AGRARIAN ORGANIZATIONS The Discrete structural analysis defines principle effective boundaries of diverse agrarian organizations - farms, contracts, markets etc. In addition to the (combinations of) critical dimensions, any analysis of efficiency of individual forms is to take into account the specific characteristics of participating agents and the economic, institutional, natural etc. environment where activity takes place. More particularly, the profound analysis of the efficiency has to: First, identify the range of feasible organizational forms for each generic mode for the specific context of a particular country, region, subsectors, agents etc. Principally, the variety of “internal organization” in agriculture includes: one-person farm/firm, family farm/firm, group farm/firm (partnership), cooperative, corporation, public farm/firm, joint venture etc. The corresponding forms of “free market” are: spot exchange on local/regional markets; classical contract, wholesale trade, direct sell on international markets etc. The “special contract form” could be: short-term contract, long-term contract, relational contract, interlinked organization, multilateral agreement etc. Second, determine the effective horizontal and vertical boundaries of individual forms on the basis of their potential to: overcome bounded rationality and transaction uncertainty, protect transactions and investments from hazard of opportunism, explore economy of scale and size on specialized and specific capital, and minimize on total (production and transaction) costs. Commonly, one-person farm/firm has zero internal transaction costs (one agent), but a limited possibility for investment in specialized and specific human and material capital. The ―internal‖ opportunities for increasing productivity (through investments, exploring economy of scale and size) increases along with the extension of the members of a coalition (group farm, partnership). The internal (ownership) organization allows a greater flexibility and control on activity - direct coordination, adaptation, enforcement, and dispute resolution by a fiat. However, extension of internal mode beyond family and small-partnership boundaries (allowing achieving the minimum technological or agronomic requirements; exploration of technological economies of scale and scope) may command significant costs for development (initiation and design, formal registration, restructuring), and for current management (collective decision making, control on coalition members opportunism, supervision and motivation of hired labor etc.). The separation of ownership from the management (cooperative, corporation, public farm/firm) gives enormous opportunities for growth in productivity and transacting efficiency – internal division and specialization of labor; exploration of economies of scale and scope; introduction of innovation; diversification; risk sharing; investing in product promotion, brand names, relations with customers, counterparts and authorities. However, it could be

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

76

Hrabrin Bachev

connected with huge transaction costs for decreasing information asymmetry between management and shareholders, decision-making, controlling opportunism, and adaptation. The cooperative and non-for profit form also suffers from low capability for internal long-term investment due to non-for-profit goals and non-tradable character of shares (so called ―horizon problem‖). The special contract combines the potential for a greater ―control‖ on transactions with possibility to explore the advantages of further specialization of activity. Nevertheless, it could be connected with large costs for preparing and enforcement of contracts for complex occasional transactions with high unilateral dependency. The boundaries of agrarian markets extend along with the development of specialization and standardization of agrarian recourses, technologies, and products, and institutional conditions for protecting private (absolute and contract) rights. However, market governance could be associated with high uncertainty, risk, and costs due to the price instability, the great possibility for facing opportunistic behavior, (semi) monopoly or ―missing market‖ situation etc. The trade-offs between the gain in the productivity/benefits and the gain in transacting costs of each mode would be quite different in a specific institutional, economic and natural environment for agents with unlike characteristics and activity (transactions) with specific combination of critical dimensions. Therefore, individual organizations will have quite different efficiency and effective boundaries. A part of the agrarian transactions will be effectively governed through a free market exchange; another part will be effectively organized through a special contract mode(s); a part of transactions will be entirely integrated (firm) while another portion protected though a special private organization(s) outside of farm gates (cooperation, association). At this stage of the analysis it becomes clear the inadequacy of traditional indicators for productivity of production costs and resources for assessing the efficiency of different agrarian organizations. The opposite is to be expected: it has to be a significant variation in the rate of profitability on investments in an agro-firm (a profit making organization) from the "pay-back" of expenditures and resources in a cooperative (a member oriented organization), a public farm (a non-for profit organization) or in a subsistence farm (giving opportunity for productive use of otherwise "non-tradable" resources such as family labor, land etc.). Indeed the later has been proven by the multiple estimates of the ―efficiency‖ of different farms during transition now in all countries from Central and East Europe [Bachev, 2004; Csáki, C. and Lerman; Gortona and Davidova; Mathijs and Swinnen] Traditional statistical, farming system, accountancy etc. data are little suitable to test and apply suggested new approach. It is necessary to (get) use a great amount of micro-economic data (for different type of transactions governed by divers organizations, and costs and benefits associated with the alternative governance modes) as well as data about specific (economic, institutional, natural etc.) environment in which different organizations evolve. The goal of such analysis is not only to test the adequacy of this new approach, but also to identify transaction difficulties, and suggest directions for improvement of public policy and business strategies. An attempt for comprehensive assessment of the efficiency of divers economic organizations in transitional Bulgarian agriculture is made by us in a separate study [Bachev 2010b].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

77

5. EFFECTIVE FORMS FOR PUBLIC INTERVENTION Steps in Improving Efficiency of Public Organizations

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The Discrete structural analysis let us specify the existing and emerging deficiencies in the organization of market and private transactions, and define the needs for public intervention in agrarian sector (the ―economic role of government‖). In modern agriculture there are always some public modes put in place along with the diverse market and private organizations. Therefore, (ideally) it could be a case of the most effective (perfect) economic governance of the sector. However, usually there are a number of social, economic, environmental etc. challenges (problems, conflicts, failures, risks) associated with the agrarian development. That is why, there is a constant need for improvement of public organization. The comparative analysis is to extend to the public modes and include (Figure 5): First, assessment on the correspondence of the public involvement to the real needs of development – e.g. identified needs for a third-party intervention from Figure 4. The analysis is to embrace the efficiency of the entire system of governance, and identify deficiencies (failures, risks) in market, and private and public organizations [Bachev 2010a]. Second, a variety of alternative modes for public intervention able to correct the existing (or emerging) market, private and public failures have to be identified, and their comparative efficiency assessed, and the most efficient one(s) selected. Third, assessment is to be made on the comparative efficiency of the selected public form to other practically possible (feasible) modes of governance such as partnership with private sector, fundamental property rights modernization, international cooperation etc. Accordingly, a new public intervention is to be initiated only if there is overall net benefit when the effects are greater than additional (individual and social) costs for the third-party public involvement.

Figure 5. Steps in analysis and improvement of public organizations.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

78

Hrabrin Bachev

Principally, public intervention is necessary for transactions with small appropriability, and transactions with high assets specificity and uncertainty and low frequency (Figure 4). Here there is no pure market or private mode for effective organization (―market failure‖, ―contract failure‖, ―private sector failure‖) and a third part involvement (state, local authority, NGO, international assistance etc.) is necessary to make such transactions more efficient or possible at all. Depending on the uncertainty, frequency, and necessity for the specific investment of public involvement, there will be different the most effective forms (Figure 6). Generally, the interventions with a low uncertainty and assets specificity would require a smaller public organization (more regulatory modes; improvement of the general laws and contract enforcement etc.).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 6. Effective modes for public intervention in agrarian sector.

When uncertainty and assets specificity of the transactions increases a special contract mode would be necessary – e.g. employment of public contracts for provision of private services, public funding (subsidies) of private activities, temporary labor contract for carrying out special public programs, leasing out public assets for private management etc. And when transactions are characterized with a high assets specificity, uncertainty and frequency then an internal mode and a bigger public organization would be necessary – e.g. permanent public employment contracts, in-house integration of crucial assets in a specialized state agency or public company etc. It is essential to assess the comparative efficiency of practically (technically, economically, socially) possible and alternative forms of governance. Thus, the additional benefits (problems to be solved, risks to be overcome, new goals to be achieved), and the costs, and the modes for a new public intervention must be socially admissible (acceptable). If different forms permit achieving the same goals and tackling the same problems, the analysis is to focus on the selection of the mode minimizing the total (implementing and transacting) costs. Assessment is to comprise all costs – the direct (tax payer, assistance agency etc.) expenses, and the transacting costs of bureaucracy (for coordination, stimulation, mismanagement), and the costs for individuals‘ participation and usage of public modes (expenses for information, paper works, payments of fees, bribes), and the costs for community control over and for reorganization of the bureaucracy (modernization and liquidation of public modes), and the (opportunity) costs of public inaction. Moreover, a form having the same (or less) costs as the alternatives is to be chosen if it provides more benefits or it is (socially, politically, technically) more preferable than other arrangements. If one of the possible forms provides more benefits at the expense of more costs, then the selection is to be made depending on whether the additional costs for that public intervention are socially acceptable (and feasible) or not. Similarly, if there is a single (only one) mode available for governing a particular intervention (achieving a certain social

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

79

goal) it would be introduced only if associated implementing and transacting costs are socially admissible (and feasible).

Public Intervention in Agrarian Eco-Activity

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Market and private sector fail to organize effectively most of the environmental transactions (activity) in agriculture [Bachev 2010a]. Eco-activity and exchanges are usually associated with low appropriability, high asset specificity and uncertainty, and low frequency which necessitate a public intervention. There are a great variety of possible ways for public interventions in agrarian eco-activity (Figure 7). Initially, the existing and emerging problems (difficulties, costs, risks, failures) in the organization of market and private transactions have to be specified. The appropriate pubic involvement would be to create an environment for: decreasing the uncertainty surrounding market and private transactions, and increasing the intensity of exchange, and protecting private rights and investments, and making private investments less dependent etc. New property rights

Regulations

Taxes

Assistance and support

Public provision

Rights for clean, beautiful environment, biodiversity; Private rights on natural, biological, and environmental resources; Private rights for (non) profit management of natural resources; Tradable quotas (permits) for polluting; Private rights on intellectual agrarian property, origins, (protecting) ecosystem services; Rights to issue eco-bonds and shares; Private liability for polluting

Regulations for organic farming; Quotas for emissions, and use of products and resources; Regulations for introduction of foreign species, and use of GM crops; Bans for certain activity, and use of some inputs and technologies; Norms for nutrition and pest management; Regulations for water protection against pollution by nitrates; Regulations for biodiversity and landscape management; Regulations for trading of protection of ecosystem services; Licensing for water or agro-system use; Quality and food safely standards; Standards for good farming practices; Mandatory (environmental) training; Certifications and licensing; Compulsory environmental labeling; Designating environmental vulnerable and reserve zone; Set aside measures; Inspections, fines and, ceasing activities

Tax rebates, exception, and breaks; Environment al taxation on emissions or products (pesticides, fertilizers); Levies on manure surplus; Tax or levies schemes on farming or export for funding innovations and extension; Waste tax

Recommendation and information; Demonstration; Direct payments and grants for environmental actions of farms, farmers and community organizations, businesses; Preferential credit programs; Public environmental contracts; Government purchases (water and other limited resources); Financial and price support for organic and eco-production, and special origins; Funding of environment and management training programs; Assistance in farm and eco-associations Collecting fees for paying eco-system service providers

Research and development; Extension and advise; Agro-market and know-how information; Agrometeorological forecasts; Sanitary and veterinary control, vaccination, prevention measures; Specialized public agency (company) for important ecosystems; Pertaining ―precaution principle‖ Ecomonitoring; Eco-foresight; Risk assessment

* The environmental transactions are associated with respecting the environmental rights and improving the environmental performance of individual agents. Figure 7. Effective modes for public intervention in agrarian environmental transactions*.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

80

Hrabrin Bachev

For instance, the State establishes and enforces quality, safety and eco-standards for farm inputs and produces, certifies producers and users of natural resources, regulates employment relations, transfers water management rights to farms associations, sets up minimum farmgate prices etc. All that facilitates and intensifies (market and private) transactions and increases efficiency of economic organizations. Next, practically possible modes for increasing appropriability of transactions have to be considered. The low appropriability is often caused by unspecified or badly specified private rights [Bachev 2004]. In some cases, the most effective government intervention would be to introduce and enforce new private property rights – e.g. rights on natural, biological, and environmental resources; rights on issuing eco-bonds and shares; marketing and stock trading of ecosystem services protection; tradable quotas for polluting; private rights on intellectual agrarian property and origins etc. That would be efficient when the privatization of resources or the introduction (and enforcement) of new rights is not associated with significant costs (uncertainty, recurrence, and level of specific investment are low). That public intervention effectively transfers the organization of transactions into the market and private governance, liberalizes market competition and induces private incentives (and investments) in certain activities. For instance, tradable permits (quotas) are used to control the overall use of certain resources or level of a particular type of pollution. They give flexibility allowing farmers to trade permits and meet their own requirements according to their adjustment costs and specific conditions of production. That form is efficient when a particular target must be met, and the progressive reduction is dictated through permits while trading allows the compliance to be achieved at least costs (through a private governance). The later let also a market for environmental quality to develop17. In other instances, it would be efficient to put in place regulations for trade and utilization of resources and products – e.g. standards for labor (safety, social security), product quality, environmental performance, animal welfare; norms for using natural resources, introduction of foreign species and GM crops, and (water, soil, air, comfort) contamination; a ban on application of certain chemicals or technologies; regulations for trading ecosystem service protection; foreign trade regimes; mandatory eco-training and licensing of farm operators etc. The large body of environmental regulations in developed countries aim changing the farmers behavior and restricting the negative impact on environment. It makes producers responsible for the environmental effects (externalities) of their products or the management of products uses (e.g. waste). This mode is effective when a general improvement of the performance is desired but it is not possible to dictate what changes (in activities, technologies) is appropriate for a wide range of operators and environmental conditions (high uncertainty and information asymmetry). When the level of hazard is high, the outcome is certain and the control is easy, and no flexibility exists (for timing or the nature of socially required result), then the bans or strict limits are the best solution. However, the regulations impose uniform standards for all regardless of the costs for compliance (adjustment) and give no incentives to over-perform beyond a certain level. 17

Permits can be taken out of market in order to raise the environmental quality above the ―planned‖ (by the Government) level.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

81

In other instances, using the incentives and restrictions of the tax system would be the most effective form for intervention. Different sorts of tax preferences (exception, breaks, credits) are widely used to create favorable conditions for the development of certain (sub)sectors and regions, forms of agrarian organization, segment of population, or specific types of activities. The environmental taxation on emissions or products (inputs or outputs of production) is also applied to reduce the use of harmful substances. The later impose the same conditions for all farmers using a particular input and give signals to take into account the “environmental costs” inflicted on the rest of society. Taxing is effective when there is a close link between the activity and the environmental impact, and when there is no immediate need to control the pollution or to meet the targets for reduction. However, an appropriate level of the charge is required to stimulate a desirable change in farmers behavior. Furthermore, some emissions vary according to the conditions of application and attempting to reflect this in tax may result in complexity and high administrating costs. In some cases, a public assistance and support to private organizations is the best mode for intervention. Large agrarian and rural support and development programs have been widely used in all industrialized countries. They let a ―proportional‖ development of agriculture and improvement of farmers welfare (―income parity‖). The public financial support for the environmental actions is the most commonly used instrument for the improving environment performance of farmers. It is easy to find a justification for the public payments as a compensation for the provision of an ―environmental service‖ by farmers. However, the share of farms covered by various agri-environmental support schemes is not significant. That is a result of the voluntary (self-selection) character of this mode which does not attract farmers with the highest environment enhancement costs (most intensive and damaging environment producers). In some cases, the low-rate of farmers‘ compliance with the environmental contracts is a serious problem. The later cannot be solved by augmented administrative control (enormous enforcement costs) or introducing bigger penalty (politically and juridical intolerable measure). A disadvantage of ―the payment system‖ is that once introduced it is practically difficult (―politically unacceptable‖) to be stopped when goals are achieved or there are funding difficulties. Moreover, an withdraw of the subsidies may lead to further environmental harm since it would induce the adverse actions such as intensification and return to the conventional farming. The main critics of the subsidies are associated with their ―distortion effect‖, the negative impact on ―entry-exit decisions‖ from polluting industry, the unfair advantages to certain sectors in the country or industries in other countries, not considering the total costs (transportation and environmental costs, and ―displacement effect‖ in other countries). It is estimated that the agri-environmental payments are efficient in maintaining the current level of environmental capital but less successful in enhancing the environmental quality. Often providing public information, recommendations, training and education to farmers, other agrarian and rural agents, and consumers are the most efficient form. In some cases, a pure public organization (in-house production, public provision) will be the most effective as in the case of as in case of important agro-ecosystems and national parks; agrarian research, education and extension; agro-meteorological forecasts; border sanitary and veterinary control etc.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

82

Hrabrin Bachev

Usually, the specific modes are effective if they are applied alone with other modes of public intervention. The necessity of combined intervention (a governance mix) is caused by: the complementarities (joint effect) of the individual forms; the restricted potential of some less expensive forms to achieve a certain (but not the entire) level of the socially preferred outcome; the possibility to get an extra benefits (e.g. ―cross-compliance‖ requirement for participation in public support programs); the particularity of the problems to be tackled; the specific critical dimensions of the governed activity; the uncertainty (little knowledge, experience) associated with the likely impact of the new forms; the practical capability of Government to organize (administrative potential to control, implement) and fund (direct budget resources and/or international assistance) different modes; and not least important the dominating (right, left) policy doctrine [Bachev 2010a]. Besides, the level of an effective public intervention (governance) depends on the kind of the problem and the scale of intervention. There are public involvements which are to be executed at local (ecosystem, community, regional) level, while others require nationwide governance. And finally, there are activities, which are to be initiated and coordinated at international (regional, European, worldwide) level due to the strong necessity for transborder actions (needs for a cooperation in natural resources and environment management, for exploration of economies of scale/scale, for prevention of ecosystem disturbances, for governing of spill-overs) or consistent (national, local) government failures. Very frequently the effective governance of many problems (risks) requires multilevel governance with a system of combined actions at various levels involving diverse range of actors and geographical scales. The public (regulatory, inspecting, provision etc.) modes must have built special mechanisms for increasing the competency (decrease bounded rationality and powerlessness) of the bureaucrats, beneficiaries, interests groups and public at large as well as restricting the possible opportunism (opportunity for cheating, interlinking, abuse of power, corruption) of the public officers and other stakeholders. That could be made by training, introducing new assessment and communication technologies, increasing transparency (e.g. independent assessment and audit), and involving experts, beneficiaries, and interests groups in the management of public modes at all levels. Furthermore, applying “market like” mechanisms (competition, auctions) in the public projects design, selection and implementation would significantly increase the incentives and decrease the overall costs. Principally, a pure public organization should be used as a last resort when all other modes do not work effectively [Williamson]. The ―in-house‖ public organization has higher (direct and indirect) costs for setting up, running, controlling, reorganization, and liquidation. What is more, unlike the market and private forms there is not an automatic mechanism (such as competition) for sorting out the less effective modes18. Here a public “decision making” is required which is associated with high costs and time, and it is often influenced by the strong private interests (the power of lobbying groups, policy makers and their associates, employed bureaucrats) rather than the efficiency. What is more, widespread “inefficiency by design” of public modes is practiced to secure (rent-taking) positions of certain interest groups, stakeholders, bureaucrats etc. [Williamson]. Along with the development of general institutional environment (―The Rule of Law‖, transparency) and the measurement, communication etc. technologies, the efficiency of pro18

It is not rare to see highly inefficient but still ―sustainable― public organizations around the world.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Efficiency of Economic Organizations and Public Policy Interventions…

83

market modes (regulation, information, recommendation) and contract forms would get bigger advantages over the internal less flexible public arrangements. Usually hybrid modes (public-private partnership) are much more efficient than the pure public forms given the coordination, incentives, and control advantages. In majority of cases, the involvement of farmers, farmers organizations and other beneficiaries increases efficiency - decreases asymmetry of information, restricts opportunisms, increases incentives for private costs-sharing, reduces management costs etc. [Bachev 2004] For instance, a hybrid mode would be appropriate for carrying out the supply of non-food services by farmers such as the preservation and improvement of environment, biodiversity, landscape, historical and cultural heritages. That is determined by the farmers information superiority, the strong interlinks of that activity with the traditional food production (economy of scope), the high assets specificity to the farm (farmers competence, high cite-specificity of investments to the farm and land), and the spatial interdependency (needs for cooperation of farmers at a regional or wider scale), and not less important – the farm‘s origin of negative externalities. Furthermore, the enforcement of most labor, animal welfare, biodiversity etc. standards is often very difficult or impossible at all. In all these cases, stimulating and supporting (assisting, training, funding) the private voluntary actions are much more effective then the mandatory public modes in terms of incentive, coordination, enforcement, and disputing costs. Anyway, if there is a strong need for a third-party public involvement but an effective (government, local authority, international assistance etc.) intervention is not introduced in a due time, the agrarian ―development‖ would be substantially deformed [Bachev 2004]. Thus the public (Government) failure is also possible and often prevails. In Bulgaria, there have been a great number of bad examples for public under- and overinterventions in agrarian sector during post-communist transition now [Bachev 2010a; Bachev and Tsuji]. Consequently, a primitive and uncompetitive small-scale farming; predominance of over-integrated and personalized exchanges; ineffective and corrupted agrarian bureaucracy; blocking out all class of agrarian transactions (innovation and extension supply, long-term credit supply, supply of infrastructure and environmental goods); and development of a large informal (gray) sector, all they have come out as a result. Our comparative analysis let us improve the design of the new forms of public intervention according to the specific market, institutional and natural environment of a particular country, region, sub-sector19, and in terms of perfection of the coordination, adaptation, information, stimulation, restriction of opportunism, controlling (in short – minimization of transaction costs) of participating actors (decision-makers, implementers, beneficiaries, other stakeholders). What is more, it also unable us to predict likely cases of new public (local, national, international) failures due to impossibility to mobilize sufficient political support and necessary resources and/or ineffective implementation of otherwise ―good‖ policies in the specific economic and institutional environment of a particular country, region, sub-sector etc. Since the public failure is a feasible option its timely detection permits foreseeing the persistence or rising of certain problems in agrarian development, and informing (local, international) community about associated risks. 19

The effective institutions can not be ―imported― but must be designed for the specific conditions of different countries, regions, sectors etc. [North].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

84

Hrabrin Bachev

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

CONCLUSION In unreal economy "without institutions and transaction costs" the theory of agrarian organization is very simple - there are no agrarian organizations (farms, firms, cooperatives, contractual arrangements etc.). Here there is a single mechanism for governing (organizing, coordinating, stimulating) the entire economic activities - the free market. ―Situation of efficiency‖ is easily achieved since agrarian agents (individuals, households, firms) automatically and costlessly adapt their behavior according to movements of market prices and changes in production technologies. In the real agrarian economy with diverse agents, institutions and transaction costs there is also place for other effective (non market) modes for organization - partnerships, , contracts, public and hybrid forms etc. ―The old‖ problem of efficiency founds a "new" dimension through incorporation into analysis of the costs of transacting (in addition to the production costs). Moreover, accent is put on assessment of comparative efficiency of all (rather then only a part) of the alternative modes for economic organization in agriculture – ―free market‖ as one extreme and ―subsistent farm‖ or/and complete (public or private) hierarchy‖ as another poll(s). It also becomes absurd the traditional ―black box‖ approach in analysis of the governing structures and productivity as an indicator for efficiency of different agrarian organizations. Our new framework helps us better understand the factors for organizational choice and efficiency, and the needs for public intervention in agrarian sector. The analysis of transaction costs identifies an immense range of ―market failures‖ associated with unspecified or badly specified property rights; inefficient system for enforcement of absolute and contracted rights; high uncertainty and dependency of activity, low appropriability of rights etc. The economic agents deal with market deficiency developing different non-market forms for effective governance such as contracts, internal modes, collective actions etc.) Nonetheless, private sector also ―fails‖ to safeguard individual rights and carry out certain activities at effective scale. That is particularly true for human and eco-rights, technological and infrastructural development, management of non-renewable resources, environmental conservation activity etc. Thus there is a strong need for a third-party public involvement in market and private transactions though institutional modernization, assistance, regulation, hybrid or in-house public organization. However, diverse forms of public interventions are with unequal efficiency and the most efficient one is to be selected taking into account the overall transaction costs and contribution to sustainable development. Nevertheless, ―public failure‖ is also possible, and inappropriate involvements, under or over-regulations, mismanagement, corruption etc. are widespread around the world. Agrarian sustainability is significantly compromised when market and private sector fails, and no effective public intervention takes place - imperfect institutional structure is not reformed, delayed or bad government interventions prevail, fruitless international assistance dominate, and needed global governance is not established. Suggested new concept of efficiency is inseparable part of the new understanding of agrarian organizations. However, the transaction costs economizing is not only a modern academic concept but a real practice in the world we are living in. Here arguments such as ―transaction costs are difficult to measure‖ and therefore ―they will be ignored in assessment

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Efficiency of Economic Organizations and Public Policy Interventions…

85

of efficiency‖ are not acceptable - not only in research works, but in the farm management and agrarian policies design.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

REFERENCES Bachev, H. (2004). Efficiency of Agrarian Organizations, Farm Management and Rural Planning No 5, Fukuoka: Kyushu University Press, 135-150. Bachev, H. (2010a). Governance of Agrarian Sustainability, New York: Nova Science Publishers. Bachev, H. (2010b). Governing of Contractual Relations in Transitional Agriculture, in Thomas L. Wouters (editor), Progress in Economics Research. Volume 20, New York: Nova Science Publishers. Bachev H. and M.Labonne. About Organization of Agrarian Innovations, INRA, Montpellier, 2000. Bachev, H. and Tsuji, M. (2001). Governing of Agrarian Transactions. Management and Rural Planning II, Fukuoka: Kyushu University Press, 185-202. Coase, R. (1937). The Nature of the Firm, Economica 4, 386-405. Coase, R. (1960). The Problem of Social Costs, Journal of Law and Economics 3, 1-44. Csáki, C. and Lerman, Z. (2000). Structural change in the farming sectors in Central and Eastern Europe, World Bank Technical Paper Volume 465, Washington DC. Dahlman, C. (1979). The problem of Externality, Journal of Law and Economics, 22, 141162. Demsetz, H. (1969). Information and Efficiency: Another Viewpoint, Journal of Law and Economics, 12, 1-22. Eggertsson, T. (1990). Economic Behavior and Institutions, New York: Cambridge University Press, 1990. Furuboth E., and Richter, R. (1998). Institutions and Economic Theory: The Contribution of the New Institutional Economics, The University of Michigan Press, Ann Arbor, 1998. Gortona M. and S. Davidova. Farm productivity and efficiency in the CEE applicant countries: a synthesis of results, Elsevier B.V. 2003. Harvey, J., Klein, P. and Sykuta M. (1997). Markets, Contracts, or Integration? The Adoption, Diffusion, and Evolution of Organizational Form, CORI Working Paper No. 2007-01 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=980301##. Harvey, J. and Sykuta M. (2005). "Property Right and Organizational Characteristics of Producer-Owned Firms and Organizational Trust", Annals of Public and Cooperative Economics, 76 no. 4, 545-580. Mathijs, E. and Swinnen J. (1997). Production Organization and Efficiency during Transition: An Empirical Analysis of East German Agriculture, Policy Research Group, Working Paper No. 7 http://www.agr.kuleuven.ac.be/aee/clo/prgwp/prg-wp07.pdf. Mori, T. (1991). The History of Japanese Agriculture, in Agricultural Policy in Japan, XXI IAAE Conference, Tokyo. North, D. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

86

Hrabrin Bachev

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Olson, M. The Logic of Collective Actions: Public Goods and the Theory of Groups. Cambridge: Harvard University Press, 1969. Pigou, A. (1920). Economics of Welfare. London: Macmillan and Co. Sporleder, T. (1992). Managerial Economics of Vertically Coordinated Agricultural Firms, American Journal of Agricultural Economics, Vo l 74, No 5, 1226-1231. Williamson, O. (1996). The Mechanisms of Governance, Oxford University Press, New York, 1996.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 87-115

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 3

AN ENVIRONMENTAL IMPACT ASSESSMENT OF BIOFUEL FEEDSTOCK PRODUCTION ON AGRO-ECOSYSTEM BIODIVERSITY IN CANADA J. A. Dyer1, O. Q. Hendrickson2, R. L. Desjardins3 and H. L. Andrachuk4 1

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Independent contract researcher, formerly with Agriculture and Agri-food Canada, Cambridge, Ontario, Canada 2 Ecosystem and Priorities Branch, Environment Canada, Ottawa, Ontario, Canada 3 Research Branch, Agriculture and Agri-food Canada, Ottawa, Ontario, Canada 4 Junior consultant, Kingston, Ontario, Canada

ABSTRACT While biofuels may off-set some fossil energy use and CO2 emissions, there is a need to determine if biofuel feedstock crops can be produced without threatening biodiversity. Environmental Impact Assessment (EIA) can be an important investigative tool if a broad scope of assessment is set. Most assessments of the biofuel industries focus on CO2 equivalent emissions or energy. Biofuel impacts on biodiversity have proven to be more easily identified than quantified and very difficult to compare with the expected energy balance or carbon footprint. The qualitative nature of EIA allows investigators to look beyond the carbon footprint when determining agro-ecosystem sustainability. The EIA process described in this chapter specifically addressed the impacts on biodiversity in Canada caused by feedstock production for biodiesel, corn ethanol and cellulosic ethanol. Case-study scenarios for these three industries were used to demonstrate the EIA process. The scope of this EIA was the agro-ecological aspects of biofuel feedstock production, particularly land use. Forest biomass and processing facilities were excluded. Although biofuels and the feedstock systems that support them have substantial economic benefits, the EIA process does not equate benefits to negative effects in impact determination. Two environmental assessment methods were selected for this application. In the Reduced Impact Matrix method, row-column intersections identify a wide range of project-environment interactions and facilitate the documentation of environmental

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

88

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al. effects. Although less comprehensive, the Project Environment Diagram method identifies the secondary effects. Both techniques rely on project activity and environmental component lists. This EIA used the habitats that define agro-ecosystems to define the environmental components. These habitats include water bodies, agroecological features, farmland and related landscapes, and biological features. Biofuel feedstock crops can have many secondary impacts on agro-ecosystems. The type of secondary effects involved often stem from secondary activities. While these activities reflect farm management and land use decisions that are not directly part of the biofuel project, they are induced as a result of the planned project activities. Because of secondary effects, biofuel feedstock production cannot be assessed in isolation of foodand feed-based agriculture. For the same reason, cellulosic ethanol production could pose as much a risk to biodiversity as canola biodiesel or corn ethanol, particularly on rangeland. Because biodiversity impacts are unlikely to carry the economic or political weight needed to terminate most biofuel projects, mitigation policies are a more practical option than prohibition for protecting agro-ecosystem biodiversity.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

INTRODUCTION Biofuel ventures cannot be considered sustainable if they destroy ecosystems with high biodiversity, even though they may be positive with respect to greenhouse gas (GHG) emissions and energy production (IRGC, 2008; UNEP, 2009). While many developed countries now regulate environmental sustainability for biofuel production, environmental impacts not related to fossil fuel or energy, such as biodiversity losses, are only mentioned in general terms (Dornburg et al., 2008) or not at all (Karman et al., 2008; UNEP, 2009). Since biofuel feedstock ventures evolve unique relationships with their surrounding agroecosystems, these ventures have many possible impacts that have no CO2 emission equivalent (IRGC, 2008; Lee and Elsam, 2008). Impacts on biodiversity have proven to be more easily identified than quantified and very difficult to compare with the expected energy and GHGrelated benefits (Karman et al., 2008). No quantitative study of the effects of biofuel production on species diversity has yet been published (Sala et al., 2009). Life Cycle Assessment (LCA) is a valuable policy tool because of the emphasis of this technique on upstream (cradle to grave) effects (von Blottnitz and Cunan, 2007). Most LCAs for the biofuel industry, however, do not cover biodiversity impacts from feedstock crops (UNEP, 2009). Unless LCA practitioners learn to account for these feedstock production factors, this technique will provide an incomplete picture to policy makers (IRGC, 2008). Environmental Impact Assessment (EIA) offers an important investigative tool for analyzing the biophysical factors of biofuel feedstock crops (FAO, 2008). Unlike LCA (Pelletier et al., 2008), the qualitative nature of the EIA process allows a broad (multi-variable) scope. Rather than focusing on a single variable such as CO2 equivalent emissions or energy, EIA can consider many variables. This chapter explores how biofuel feedstock crops may be threatening biodiversity. It does not compare or rank the energy or GHG emissions from different types of biofuel. It also does not address food security. Since EIA is not a cost-benefit analysis, potential benefits of biofuel projects are not equated to, or used to justify or offset, negative environmental effects identified in EIA. The EIA described in this chapter specifically addresses the impacts on

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

89

biodiversity caused by biofuel feedstock production in Canada. Since it took a risk approach, any and all possible effects had to be identified and considered. The feedstock sources that were considered were limited to agricultural production, with forestry and other non-agricultural operations, such as biodiesel from algae or city waste, being excluded. Even though some ethanol plants use almost as much water as a small city (GAO, 2009), the processing side of the three biofuel industries is not in the scope of these EIAs. Location and water use issues related to processing plants (such as effluents and air pollutants) would be dealt with by local governments. The energy used in processing has been extensively assessed in the context of GHG emissions and net energy production. Therefore, none of these processing issues are included within the scope here.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Secondary Effects Many of the effects of biofuel on biodiversity will be secondary (Searchinger et al., 2008), resulting in what has been deemed the domino effect (IRGC, 2008). Secondary effects were recognized and defined three decades ago as the effect of one environmental component on a second component when the first component has been altered by a project activity (Bisset, 1980; Wright and Greene, 1986). The mechanics of how to systematically measure, manage, or even mitigate secondary impacts of biofuel feedstock production on biodiversity, both in croplands and rangelands, has yet to receive any clear direction. Secondary effects are frequently related to secondary activities. While such activities reflect farm management decisions that are not directly part of the biofuel project, they are induced as a result of a planned project activity. Consequently, direct effects of those external activities become essentially secondary effects of the project. Secondary activities must be part of the EIA, and subject to mitigation, and such activities are part of the domino effect. The causes and effects of secondary land encroachments are defined in this study in a manner that can be adapted for use in the EIA of biofuel projects with respect to biodiversity. Although from an EIA perspective, secondary land use shifts are only one type of secondary effect, for this application they are the most important. For example, rangeland typically suffers secondary effects whenever decisions that alter livestock populations, particularly ruminants, are enacted (IRGC, 2008). The lower classes of agricultural land, such as rangeland, are often the end point of the domino effect. The direction that land use changes go often depends on the market forces at work at the time (Malcolm and Aillery, 2009). With secondary land use changes, these forces are more complex and difficult to predict, particularly for a general region- and sector-wide analysis such as described here (GAO, 2009). For example, whether livestock producers react to the loss of feed crops by finding other areas to grow or buy their feed, or by reducing the livestock populations, depends on the market value of their livestock as much as on the price of the feed.

EIA METHODOLOGY The environmental impact assessment procedure described in this chapter was based on the impact matrix and the network diagram. Both of these techniques were refined and

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

90

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

adapted to Canadian agricultural research and development projects that would qualify for assessment under the Canadian Environmental Assessment Act (CEAA). Within Agriculture and Agri-Food Canada (AAFC), where project implementers were responsible for assessing their own projects, broadly applicable techniques had to be created (Dyer, 1993). These two techniques were designed to be regulation-neutral, and easily learned and applied by personnel with a wide range of professional skills and backgrounds. Environmental, ecological and biodiversity literature was also reviewed to find any effects on the biodiversity of Canadian agro-ecosystems that have already been identified. However, most of the potential environmental effects from biofuel development projects presented in this chapter had to be derived from the analysis of activity-component interactions using the techniques described below.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Reduced Impact Matrix The Reduced Impact Matrix (RIM) method is a simplified version of the universal matrix of human activities and environmental components. The matrix concept was made popular in EIA work three decades ago by the U.S. Geological Survey (Leopold et al., 1971; Wright and Green, 1986). The main limit to its effectiveness was the long exhaustive lists needed to define both axes of the universal matrix. The RIM technique was an attempt to avoid that problem. The RIM is well suited to ensuring a broad scope (inclusive of all project activities and components of the surrounding environment) and facilitates recognition of interactions between the project and environmental components. Following its initial use in CEAA, the RIM technique was further refined in two subsequent applications (Dyer and Pataridze, 1996; Dyer, 1998). The row-column identification of project-environment interactions facilitates effective itemization and documentation of effects on the environment. The matrix is really just a table whose columns are the project activities while the environmental components become the rows. Projectenvironment interactions are identified by the intersection points within particular cells of the matrix using checkmarks. In EIA applications where more site-specific data are available, grades and rankings would replace the checkmarks in each intersection point to predict environmental effects. Given the broad overview nature of this EIA application, however, the assessment cannot be taken beyond the identification stage. In this application of the RIM process, one of the essential tasks was to create a list defining biofuel project activities in the context of the effects on biodiversity and a list of environmental components that may possibly be linked to any of the project activities. In this case the components are limited to vulnerable biodiversity features. Effective presentation depends on all items in these lists being assigned appropriate key words. The RIM technique was modified to allow a comparison of three biofuel feedstock scenarios (details are presented below). The hemi-grid above the project-environment grid in the RIM was also used to show interactions among project activities, thus identifying some activities as secondary.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

91

Project Environment Diagram The main weakness of the RIM is in dealing with secondary effects. While network diagrams do not prompt the reviewer to do a broad scope of assessment as effectively as the RIM, this technique is an effective and easily communicated way of describing secondary effects. This diagramming approach borrows a concept from qualitative risk analysis, which is the tracking and charting of causal chains (Belausteguigoitia, 2004; Fischoff et al., 1978). The particular network diagramming technique that was adapted to the AAFC-CEAA (Dyer, 1993) requirements is henceforth referred to in this chapter as the Project Environment Diagram (PED). The PED technique is applicable to describing all aspects of EIA and facilitates descriptive report writing. Constructing a PED also usually results in a better understanding of the causal chains, particularly secondary effects and activities. A keyword appears at the centre of the diagram that denotes the basic project. Keywords for project activities are distributed around the project title. Each activity keyword is enclosed in a rectangle with a line joining it to the project title. The environmental components are linked to the project activities by which they are affected. Each component is enclosed in an oval to distinguish it from project activities. When a component is shown which is joined to another component instead of to a project activity, the diagram is displaying a secondary effect. Since the PED can also use activity to activity lines to identify secondary activities, consistent use of ovals and rectangles, as well as arrow heads, in the PED is essential.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Testing the EIA with Scenarios The EIA process was demonstrated here with three hypothetical scenarios, including canola biodiesel, cellulosic ethanol, and corn ethanol. There were two other possible choices for EIA scenario tests: soybean-based biodiesel in the east and wheat-based ethanol in the west. Only minor impacts were anticipated from these two industries, so they have not been included in the EIA scenarios. The use of soybeans for biodiesel feedstock is already in operation in eastern Canada (McKague, 2009). The biodiesel market for soy oil would stimulate soybean production in the corn growing regions of Canada and displace some of the corn monoculture. Wheat used as a feedstock is a small share of the wheat that goes into the food market in Canada. Since this feedstock market is an effective outlet for low quality wheat (EIC, 2010), this ethanol industry is relatively benign with respect to most environmental impacts. In this chapter, EIA covers crop production and the land use and reallocation as a result of expanding biofuel feedstock crops. Since the scenarios include potential impacts on biodiversity from secondary land encroachments, adjacent habitats are important components of the environment. Intensification, including any practices that increase yield at the expense of sustainability, is another theme common to all three EIA scenarios. The conversion of extensive agricultural systems and natural habitats such as grasslands into intensive monocultures is one of the major threats to biodiversity (IRGC, 2008). The scale of these scenarios is feedstock production on a regional basis, but they are not intended to apply at a farm level. For the application of the PED, each scenario is described as if it were a stand-alone EIA report. In each case, the scope, project activities, environmental settings and methodology are

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

92

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

discussed in detail prior to listing the environmental effects that were found from this analysis. The application of the RIM was to compare the three EIAs. To facilitate the required consistency and transparency when comparing the three biofuel scenarios (Karman et al., 2008), the same set of biodiversity (BD) components was used for all three scenarios. Therefore instead of repeating the BD-component descriptions in each PED application, they are listed here for reference in all three scenarios.

Biodiversity Components

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The BD-components selected for this EIA represents a shift away from a direct listing of vulnerable animals and plants, and towards habitats that interact with agriculture in Canada. Expanding crop production areas is a threat to wild biodiversity through habitat loss (FAO, 2008) and through species reduction (Barney and Ditomaso, 2008). Conversely, drastic reductions in species can threaten habitats (Sala et al., 2009), thereby putting whole communities at risk. The focus here on how habitats, rather than diverse groups of organisms, are affected facilitates a more practical application of the EIA process, while still being a step beyond the generalized biodiversity impact statements found in much of the biofuel literature (Sala et al., 2009). The keywords necessary to the RIMs and PEDs are the underlined paragraph headings in the following descriptions. The region in which each component is applicable is shown at the end of each description in brackets as follows: PR for Prairie; OQ for Ontario-Quebec; B for both.

Water Bodies This group of features includes a wide range of aquatic habitats along with the riparian buffers and shorelines that border them. The biodiversity of these habitats is vulnerable to agricultural activities (PCAB, 2010). Examples of biodiversity related to water bodies include waterfowl (e.g. ducks) and other wetland birds, aquatic and terrestrial plants (e.g. grasses, legumes, forbs), shrubs and trees, fish, benthic macro-invertebrates, amphibians, reptiles, muskrats, and beavers. Riparian buffers are strips of trees, shrubs and grass growing between surface water and agricultural land. They enhance wildlife habitat and increase biodiversity, provide shelter and breeding areas for fish and wildlife, produce forage, protect water quality, reduce erosion, and decrease flooding (AAFC, 2008; PCAB, 2010). Riparian areas support more biodiversity than plant and animal communities on adjacent uplands (PCAB, 2010) while creating and maintaining habitat for fish, invertebrates, and plants (PCAP, 2008). Additionally, riparian buffers provide corridors for wildlife movement (PCAP, 2008). Although not treated as a distinct BD-component in this EIA, the status of riparian biodiversity is considered as part of rivers and streams (see below). Wetlands: In many cases, wetlands are the most important habitats for wildlife on farmland (OMAFRA, 2009a). Planting forage buffer strips around wetlands and dugouts minimizes wildlife damage to crops (PCAB, 2010). Land use practices such as tilling and applying fertilizers and pesticides to lands adjacent to wetlands can influence water quality. A buffer strip around the perimeter of a wetland can effectively filter sediments and contaminants carried in run-off. This can have an important impact on both surface and ground water quality (OMAFRA, 2009a). (B)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

93

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Streams and Rivers: The flow of water through rural landscapes and the drainage of surface and ground water from farmland determine the habitat value of streams and rivers. Nitrogen fertilizer, herbicides and other pollutants (Bringezu et al., 2009), and eroded soil enter these water bodies as a result of surface runoff and ground water flow, causing siltation, which can affect spawning beds. These flow rates, and the vulnerability of the organisms in rivers and streams, are subject to farm management practices. (B) Ponds and Lakes: The relationship between farmland and ponds and lakes is the same as between farmland and flowing water. The difference is that the length of time that water is retained and the period required to recover from chemical shocks is much longer in still water. The community of organisms in standing water is different from flowing water, so ponds and lakes warrant designation as a separate BD-component. (B) Potholes: In the Prairies, much of the standing surface water is in potholes or sloughs. These water bodies are characterized by having little or no means of surface water drainage. They are also integral to the prairie landscape and farmland. They are a unique habitat for waterfowl and are essential to the migration routes of these birds. (PR)

Agro-Ecological Features Naturalized Corridors: Natural fencerows, shelterbelts, and buffers provide important connections which allow flow within a wildlife gene pool. They must be contiguous between habitats. Protected corridors of permanent vegetation allow wildlife to travel safely between natural areas including woodlands and wetlands (OMAFRA, 2009b). Forested ravines, buffer strips, shelterbelts, windbreaks, treed fencerows, and farm lanes are all valuable types of wildlife corridors. The suitability of these corridors and associated habitats is related to the type and intensity of cultivation of the farmland on which they are located (Neumann et al., 1992). Examples of biodiversity in corridors include songbirds, game birds, and birds of prey (e.g. cardinals, woodpeckers, owls, hawks), mammals (e.g. rabbits, hares, squirrels, foxes), and reptiles (snakes, lizards and black rat snakes) and five lined skinks. (B) Buffer Zones: Buffers can provide food and shelter for wildlife and protect against soil erosion (OMAFRA, 2009a). They can provide breaks in what otherwise could be extensive areas of monoculture. Farmers may intentionally seed buffer zones on marginal high risk soils to provide shelter and food for wildlife and reduce damage to adjacent crops; healthy wildlife habitats in buffer zones provide a boon to biodiversity and improve soil health (PCAB, 2010). Buffer strips provide habitat for ground-nesting birds and, when connected with wetlands, for waterfowl (OMAFRA, 2009a). Planting forage buffer strips around wetlands and dugouts minimizes wildlife damage to crops (PCAB, 2010). Land use practices such as tilling and applying fertilizers and pesticides to lands adjacent to wetlands can influence water quality. A buffer strip around the perimeter of a wetland can effectively filter sediments and contaminants carried in runoff. This can alter both surface water and groundwater quality (OMAFRA, 2009a). (B) Fencerows: A fencerow is the land occupied by a fence including the uncultivated area on each side of, and below, it. They mark property lines, separate fields and define household and barnyard areas. Fencerows and hedgerows are important to wildlife for traveling, nesting, roosting and for cover from weather and predators (Bakermans and Rodewald, 2002). They act as small windbreaks, prevent soil erosion, and reduce moisture loss from soil. Both location and management determine their contribution as corridors or habitats. The management factors include the width of ground they are allowed, the amount and type of

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

94

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

vegetation that is allowed to grow under or into them and, most importantly, how often they are moved or removed. Fencerows provide shelter and food for a variety of animals, amphibians, reptiles, and birds (Doolen, 1998) and can provide habitat for the natural enemies of pests. (B) Windbreaks: Shelterbelts and windbreaks are linear plantings of trees and shrubs that are designed to block winds (AAFC, 2008). In contrast to fencerows, this is their main purpose. They work to conserve soil and water, stabilize crops, improve air quality, protect yards and livestock, trap snow, and provide income for landowners (AAFC, 2007a; AAFC, 2008). Establishing shelterbelts with vegetation has several benefits, including: increased plant diversity; improved wildlife habitat; reduced soil erosion; improved water conservation; and increased carbon sequestration (PCAB, 2010). (B) Woodlots: As well as being upland habitat, farm woodlots keep water tables in place, and reduce soil and water runoff (OMAFRA, 2009b). Woodlands of Eastern Canada are one of the most valuable ecological resources and deserve careful protection (CLWS, 1994). Clearing woodlots and using the land for intensive agriculture puts fragile land at risk of wind and water erosion. Additionally, intensive grazing by livestock in woodlands causes irreparable damage, particularly after 10-20 years. Livestock grazing damages tree roots by trampling, tree trunks by constant rubbing, and tree foliage. Grazing also destroys undergrowth vegetation, tree seedlings, and habitat for wildlife (OMAFRA, 2009b). Examples of biodiversity in woodlots include trees, shrubs, herbaceous groundcover vegetation, amphibians (e.g. salamanders), birds (e.g. songbirds, partridge, wild turkeys), and mammals (e.g. bears, foxes, deer, porcupines, rabbits, chick monk, squirrels). (OQ)

Farmland and Related Land Features Much of the vulnerable biodiversity of Canadian farmland is in the backyards and fence lines of each farm, and under the feet of farmers. Hence, rural land use categories are treated as habitats and BD-components in this EIA. Examples of biodiversity in farmland include songbirds, birds of prey, insect pollinators (e.g. bees, butterflies, flies, beetles), other beneficial insects (such as predatory beetles and wasps), and mammals (e.g. field mice, shrews, rabbits). Tilled Fields: Annual crops, including soybean, corn, canola, and wheat, are an important part of the Canadian agro-ecosystem. The annually tilled fields in which these crops are grown were deemed a BD-component by virtue of the soil organisms that are critical to the health of these soils and their varying degrees of vulnerability depending on crop production practices. (B) Hay Fields: By slowing the infiltration and runoff of surface water, hay fields minimize impacts to wetlands when grown on adjacent lands (OMAFRA, 2009a). Although they provide year-round soil coverage, they are based on specialized or hybridized perennial plants re-seeded at approximately 5-year intervals (Dyer et al., 2010a). Hay is harvested using a cutter-bar that reduces the stand to a short uniform height. Frequent harvesting can leave them devoid of floral tissue and, compared to native vegetation, are restricted to few plant types (Foster et al., 2009). (B) Pasture: By slowing infiltration and runoff, pasture minimizes impacts to wetlands, particularly when grown on directly adjacent lands (OMAFRA, 2009a). Pasture is close to being a natural ecosystem, except that this BD-component includes improved pasture. This means that, like hay fields, their plant populations include specialized or hybridized perennial

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

95

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

plants re-seeded at approximately 5-year intervals (Dyer et al., 2010a). They are a BDcomponent by virtue of their role as a less vulnerable habitat for soil organisms than annual field crops, and for more ground dwelling wildlife than hay fields. (B) Rangeland: Saskatchewan has 13 million acres of native prairie rangeland used for pasture (AAFC, 2007b). This land class is generally only used for grazing, and is managed as unimproved pasture. As the least disturbed class of arable land in Canada, it has high value as habitat and natural biodiversity (Howarth et al., 2009; UNEP, 2009). A significant benefit of a diverse native rangeland is its ability to tolerate and adapt to changes such as drought, since each plant species has different moisture tolerance levels (AAFC, 2007b). In large native rangeland pastures where there is a diverse mixture of available plant species (GonzalezHernandez et al., 2009), cattle can adjust their diets and select plants that may be more palatable and nutritious as the grazing season progresses (AAFC, 2007b). Examples of biodiversity in rangeland include mammals (e.g. ground squirrels, pocket gophers, deer, bison, prairie dogs, rabbits, mice), game birds (e.g. grouse), grassland birds, beneficial insects (e.g. pollinators), trees, shrubs, and herbaceous plants. (PR)

Biological Features There were two cases where effects on biological forms of life had to be considered directly, rather than by the vulnerability of their habitats. In both cases, they include large groups of organisms which share common risk factors with respect to agricultural impacts, but also span two or more of the habitat-based features used in this EIA. Soil Life Forms: Microbes are present in all soils and are critical to nutrient cycling. They are diverse and part of the biodiversity of agro-ecosystems. Other organisms also help to revitalize soil by acting as soil turners and detritus feeders. Soil life forms are most critical in annual field crops where high producing plants extract soil nutrients at higher rates than natural vegetation, or even grazed perennial plants. At the same time they are under stress from annual infusions of agro-chemicals (mainly commercial nitrogen and herbicides) which can disrupt the life-cycles of these organisms. There is little readily-available information on soil biota; it is present in the scientific literature but needs to be included in documentation for users. (B) Native Plants: Plants native to a region are the best suited plants to the areas in which they grow, but only under natural conditions. They are the foundation of any terrestrial ecosystem. They are vulnerable to competition from cultivated crops and deserve treatment as a distinct BD-component. As well as encouraging native pollinators and other beneficial insects, they are a diverse and important part of the biodiversity of agro-ecosystems. (B)

EIA APPLICATION AND RESULTS Scenario 1: Canola Biodiesel Scope At 8.5 Mt in 2006-2007, Canada is the world‘s largest canola producer (Bradley, 2008; Dessureault, 2007). The energy and GHG emission balances for canola biodiesel in Canada are both positive (Dyer et al., 2010b). The Canola Council of Canada has been lobbying to include a biodiesel content target in the national renewable fuel strategy (Klein and LeRoy,

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

96

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

2007). The demand for Canadian canola oil in Europe for its cooking quality, as well as for biodiesel, has been increasing (Bradley, 2008; Dessureault, 2007; Informa, 2006). The Government of Canada is investing in research that will boost canola production (CCC, 2009). Manitoba has licensed Greenway Bio-diesel to build a biodiesel plant in St. Boniface in response to the market for biodiesel in Minnesota. The Canadian Bioenergy Corporation and the Archer Daniels Midland Company are negotiating a joint venture for a 265 million litre/year canola-based biodiesel production facility at Lloydminster, Alberta. The Canadian biodiesel industry is expected to continue expanding (CRFA, 2009). The push for government support for a domestic biodiesel industry, based mostly on canola, is sufficient justification for an EIA of this emerging industry. The scope of this assessment covers the interactions of expanded canola production with the broad range of crops and land uses that it may displace, thus opening the way for secondary impacts.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Project Description Canola production, whether for the food market or for biodiesel feedstock, shares a common set of field operations and input requirements with all other annual row crops in the Prairies (Dyer et al., 2010b). These include tillage in preparation for seeding, weed control, mechanical (combine) harvesting, and application of fertilizers and pesticides. Canola varieties, developed with Genetically Modified Organisms (GMO-canola), are prevalent in the Canadian Prairies. Canola is seeded into the same class of land as the small grain cereals and pulses typical of prairie agriculture. The major feedstock production (project) activities relating to canola biodiesel are as follows: A. The market pressures for more canola biodiesel will mean that areas seeded to canola must increase. (Expansion) B. Canola area expansion could divert land away from other field crops thereby intensifying other forms of crop production. (Displace crops) C. Either the direct expansion of canola or the secondary effect of relocating other feed crops could push livestock producers into more marginal land. (Displace LS) D. Expansion may cause direct seeding of canola into lower quality land. (Sod breaking) E. The enhanced market for canola would lead to intensified production practices in order to raise yields. (Intensification) F. Higher canola yields have already been achieved through greater use of hybrid and GMO canola varieties; intensification will mean more of those seeds. (Hybrids and GMOs) G. Intensification will mean more commercial nitrogen fertilizer to maximize yields. (N-fertilizer) H. The by-product of canola oil production is a high protein meal that can be used for livestock feed. (By-product) I. The canola meal by-product may mean that livestock are densely concentrated in confined areas to exploit this feed source. (LS density)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

97

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 1. Project Environment Diagram of canola biodiesel feedstock production. Squares enclose project activities, ovals enclose biodiversity components.

Environmental Setting Canola is Canada‘s most important oilseed crop. Almost exclusively grown in the western provinces (Casséus, 2009), it is one of about 8 major annual field crops produced in that region. Canola represented 16% of the annual field crops area in western Canada in 2001 and 12% of all western farmland, including perennial forage and pasture (excluding rangeland). Canola areas increased in Canada by a third between 2001 and 2006 (Casséus, 2009). The secondary effects of the growth of the biodiesel industry in Canada will be felt throughout this agro-ecosystem, including rangeland. Of all land used for agriculture west of Ontario, 30% was classed as rangeland (Statistics Canada, 2001). The Canadian Prairies cut across several of Canada‘s 16 ecozones (ESWG, 1995) and share a vulnerable pothole ecosystem with the northern plain states of the US mid-west (Brooke et al., 2009). Environmental Effects 1. The diversion of land from other field crops to expand canola will lead to all of the secondary effects associated with more intensive production of the displaced crops and displacement of livestock. 2. Expansion of canola could push cattle producers into more rangeland for grazing, or it could cause relocations of other crops with less market value into the better quality grazing land which would displace cattle into lower quality land. This overstocking of grazing land, a secondary effect of canola expansion, is a threat to rangeland and native plants.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

98

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3. Direct seeding into lower quality land could threaten soil and ground dwelling wildlife, particularly ground nesting bees, because prior use of this land would likely have been for perennial growth. Breaking sod to seed such land to annual crops means more soil erosion and more farm chemicals and silt washed into wetlands and potholes. The lower soil quality, however, is unlikely to support viable crop yields. 4. Canola expansion might entice farmers to remove shelterbelts, fencerows and the other on-farm habitats in order to widen canola fields, which would reduce wildlife habitat. 5. The use of hybrid and GMO canola varieties would remove the disincentive (market barrier) to plant GMO canola, since the use for fuel would likely not be opposed by food safety regulations (IRGC, 2008). 6. Increased use of GMO canola can cause genetic contamination of closely-related native plant communities. Cross-pollination of GMO canola with wild relatives risks introducing transgenic DNA into native plants. 7. Increased use of nitrogen fertilizer will lead to groundwater pollution and damage to downstream aquatic habitats (GAO, 2009). 8. The increase in feedlots or larger hog or poultry operations in response to canola meal would make farm animal waste disposal more difficult which could affect ground and surface water, and related aquatic biodiversity.

Benefits Specific to Canola Biodiesel Importing palm oil to Europe for biodiesel production from tropical countries threatens the rain forests in those countries (Klein and LeRoy, 2007). Hence, any share of the European market for biodiesel feedstock (canola and soy oil) that Canadian canola can capture would displace palm oil (Bradley, 2008; CCC, 2009; Dessureault, 2007; IRGC, 2008). The meal byproduct from processing oilseed crops for biodiesel (canola and soybeans) results in a high protein content livestock feed (McKague, 2009). Diverting cropland to summerfallow is a traditional practice is western Canada used to ensure adequate soil moisture reserves for a grain crop in the next growing season. It was common in the Prairies in past decades, particularly in the more arid south-central region. Although the link between this practice and wind erosion was recognized decades ago (Dyer, 1982), keeping the more arid grain growing areas in continuous crops really depends on the profitability of those crops. Hence, the market opportunity from canola biodiesel could enhance that profitability and be a disincentive for summerfallow.

Scenario 2: Cellulosic Ethanol Scope Ethanol can be made from cellulosic materials such as crop residues (straw or corn stover and husks), forestry wastes (sawdust or slash), municipal solid waste, and recycled newsprint (EIC, 2010). Whereas cellulosic ethanol is a more complex biochemical process, it may become more economical than grain ethanol with improved technology, or if prices rise for cooking quality or animal feed grains (CCCM, 2010). Cellulosic ethanol should provide better energy returns and cause fewer disruptions in food supply than corn ethanol (Bohlen,

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

99

2008; Peña, 2008). Since the levels of projected GHG emissions and energy balance look promising, the implications for the biodiversity of the lands where this industry is developed need to be assessed. An Ottawa-based biotechnology firm, Iogen, has pioneered the world‘s first demonstration-scale facility to convert cellulose material such as wheat straw into ethanol (CRFA, 2009; Dessureault, 2007). The first Iogen demonstration plant has a capacity of 3.8 million litres per year (as of April 2004) and other potential locations are being assessed for a commercial production (Sparling et al., 2007). The Iogen Corporation process uses 1,500 metric tons of feedstock per day, or 0.55 Mt/yr, and generates 198.2 million litres of ethanol per year (Klein et al., 2004). The Canadian government announced in January 2010 a program worth close to $20 million to accelerate the commercialization of cellulosic ethanol (AAFC, 2010). Given the growth that this government support is likely to stimulate, these biodiversity impacts need to be assessed. The scope of assessment includes three major options for producing cellulosic ethanol, including:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

  

introducing biomass crops specifically for the purpose of feedstock; harvesting biomass from natural vegetation; and removal of crop residue from fields where annual crops were grown.

Project Description Cellulosic ethanol may be able to exploit the infrastructure that was created by the grain ethanol industry (Hodge, 2008). Biomass feedstock, including switchgrass, diverse mixtures of prairie grasses, and crop residue, can usually be produced with little or no fertilizer, pesticides, and energy inputs (Barney and Ditomaso, 2010; Groom et al., 2008; Sparling et al., 2007). Biomass yields from switchgrass are three to five times higher than the biomass from most crop residues (Paustian et al., 2006). Such yields could entice farmers to seed switchgrass into natural grassland or other perennial forage crops, and could replace wild plants on marginal lands. In the Prairies, harvesting wheat straw can be sustainable as long as no more than 40% of the aboveground residues, other than grain, are removed no more frequently than two years out of three (Lafond et al., 2009). The major feedstock production (project) activities relating to cellulosic ethanol are as follows: A. Planting a crop specifically as a biomass (cellulosic) feedstock can mean replacing native species with monocultures. (Introduced crops) B. Introduced crops could be either high performance biomass hybrids or GMOs or both. (Hybrids) C. The biomass feedstock market may entice farmers to plow down native plant species in order to re-seed with switchgrass or other biomass monocultures. (Sod breaking) D. Once specific biomass crops are established, they would then need chemical inputs, particularly nitrogen fertilizer, to ensure maximum production. (N-fertilizer) E. Biomass could be harvested from natural vegetation. (Wild biomass) F. Harvesting the biomass from native plant communities could only be economic if done mechanically. (Harvest)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

100

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

G. Cellulosic ethanol production will require trucking large volumes of biomass from the field to barnyard, and on to the processing plants. (Transport) H. The use of crop residue as a feedstock could result in too much residue being removed from the field. (Crop residue) I. To ensure that large areas are kept un-grazed and allow biomass to grow, cattle would have to be relocated. (Displace LS)

Figure 2. Project Environment Diagram of cellulosic ethanol feedstock production. Squares enclose project activities, ovals enclose biodiversity components.

Environmental Setting The setting of the cellulosic ethanol EIA scenario cannot be defined in terms of a specific geographic area. In the first option (introduced biomass crops), where crops are planted specifically as a biomass source, and are typically perennial, the predominant regions would be lower class lands in the Prairie provinces, typically rangeland. The second option (natural vegetation) would also be harvested predominantly from Prairie rangeland (Auld, 2008). In the third option (crop residue), this source of biomass could be a by-product of any of Canada's annual field crops. The three options are assessed as one project because cellulosic ethanol processes are not expected to be specific to biomass crop types (Kelley, personal communication). Hence the same processing plant could accept corn stovers, wheat straw, switchgrass or regular hay with very little need to modify the incoming feedstock.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

101

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Environmental Effects 1. Crop introductions threaten wild plant communities and habitat (Peak Oil, 2009), including soil and ground-level animal wildlife such as ground nesting birds and solitary ground nesting bees (Lye et al., 2009). 2. Monocultures of cellulosic biofuel feedstock crops, such as switchgrass, will not provide the same biodiversity benefits as a mix of native species (GAO, 2009). 3. Grasses introduced as cellulosic feedstock crops may become invasive (Raghu et al., 2006; UNEP, 2009). This would threaten rangeland ecology that is based on a diverse range of native plants. 4. Chemical inputs (mainly nitrogen fertilizer) on land where they were never before applied would have greater impact compared to lands with a history of applied chemicals. In Prairie rangeland, this would lead to chemical pollutants accumulating in wetlands and potholes, water bodies in which the exchange of water would be very slow. A wide range of aquatic life and waterfowl would be threatened. 5. Mechanical harvesting of large areas of grassland would temporarily disturb groundlevel wildlife, and disrupt breeding and migration patterns. Ground-nesting bees could be destroyed. 6. Annual harvesting of native grasslands could damage plants that require several years to reach reproductive stage. 7. Harvesting biomass from natural vegetation will require traffic by heavy vehicles, both harvesters and trucks or wagons. The heavy machinery could damage natural vegetation and cause soil compaction in ground that would otherwise receive little or no wheeled traffic. Ground nesting wildlife, native plants and soil life forms would be threatened. 8. Unsustainable harvest rates of biomass from natural grassland would lead to changes in species mix and to soil erosion. Mixes of native plants and related aspects of prairie ecology would be altered. 9. Removal of too much crop residue can lead to decreased soil organic matter, nutrient loss (Fox, 2007) and soil erosion, particularly from surface runoff. Such excess soil removal would lead to silting and sediment damage to streams and loss of aquatic wildlife. 10. It would also lead to the loss of micro scale habitat for beneficial micro-organisms or invertebrates. Soil life forms would decline in the tilled fields of annual crops. 11. Excess residue removal may increase the need for fertilizer and compromise soil productivity (GAO, 2009). 12. Displacing cattle from their current grazing land would lead to grazing of land not otherwise or previously used for grazing cattle. The most likely secondary effect is the displacement of cattle from improved pasture to rangeland, thereby leading to overgrazing of rangeland which could alter the mix of wild native plants in those areas.

Benefits Specific to Cellulosic Ethanol Biomass can be harvested from perennial plants which keep land under permanent cover. Switchgrass can protect against soil erosion, increase soil carbon, improve water quality and provide wildlife habitat, as well as pasture or hay (Duffy and Nanhou, 2002). It is more

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

102

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

productive on higher quality land and responds well to fertilizers, but it is also suitable for marginal land primarily because it has been shown to grow well with very low fertilizer inputs (Auld, 2008; Duffy and Nanhou, 2002; Groom et al., 2008).

Scenario 3: Corn Ethanol

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Scope Canada currently has 1.4 billion litres in ethanol production capacity over 15 operational processing plants, with another 600 million liters of processing capacity under construction (CRFA, 2009). Two of those facilities are planning to double their capacity and another four projects are proposed. The projected ethanol production capacity of just over 2 billion liters will equate to the ethanol production required to meet the federal government‘s 5% renewable fuels standard by 2010. Most of this ethanol is from corn. Many governments are spending much more money to reduce GHGs through increased ethanol than they are spending on alternative non-fossil energy sources (Auld, 2008). The 506 million litres of ethanol produced from corn in 2007 accounted for 70% of the ethanol produced in Canada (Bradley, 2008; EPM, 2007). In Ontario, approximately one-third of the corn supply is now designated for corn ethanol production (McLean, 2009). Although corn-based ethanol is the worst biofuel alternative with respect to energy and GHG emissions, it is the most advanced for commercial production (Groom et al., 2008). The growth in grain ethanol production capacity is continuing despite its questionable benefits in energy contributions and GHG offsets. Corn cultivation has many potential environmental effects, and the expansion of corn in Ontario and Quebec also has the capacity to interact with the broad range of crops and land uses that it may displace. It is therefore an appropriate EIA scenario. Project Description Meeting half of Canada‘s target of 5% ethanol blend in gasoline by 2010 will require approximately half of the current farmland used for corn (Auld, 2008). This could also lead to more commercial nitrogen fertilizer (McLean, 2009) to raise yields. For fields already in annual crops, tillage is not likely to increase because of wide-spread adaptation of reduced tillage in Canada (Dyer and Desjardins, 2009). Another means of expanding corn growing areas is through continuous cropping, which will mean fewer crop rotations, particularly with soybeans, and more N-fertilizer (McLean, 2009). About two-thirds of the grain is converted to ethanol, while the processing by-product, either wet distillers grain (WDG) or dry distillers grain (DDG), provides a high-protein livestock feed (EIC, 2010; Vander-Griend, 2010). WDG must be fed to nearby cattle before it spoils, whereas DDG which can be shipped to off-site livestock operations. The major feedstock production (project) activities relating to corn ethanol are as follows: A. The increased market pressure on corn producers will lead to more intensive land use. (Intensification) B. Intensification could encourage more nitrogen fertilizer, although feed grain corn yields are already maximized. (N-fertilizer)

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

103

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

C. Increased corn production would have to be achieved by seeding more area to corn since corn production is a highly developed technology. (Expansion) D. The ethanol industry is putting pressure on livestock production by attracting farmers who currently grow corn for their livestock into the biofuel industry. (Displace LS) E. The new market for corn is diverting land resources away from wheat, soybeans, and other crops (Auld, 2008; Klein and LeRoy, 2007). (Displace crops) F. Expansion into other land classes (in Eastern Canada) could include encroachment into hilly farmland that would otherwise only be used as pasture. (Encroachment) G. Expansion could also encourage the cutting of farm woodlots to enlarge fields. (Land clearing) H. Expansion could encourage the shrinkage of field boundaries. (Enlarge fields) I. Increased tile drainage, without which many areas could not grow corn, could increase. (Tile drainage) J. Increasing production will require more corn to be grown without the soybean rotation. (Continuous crop) K. The corn ethanol market may actually divert farmers away from livestock production. (Recruitment) L. As cattle are displaced, there will be less justification for keeping land under permanent cover. (Sod breaking) M. WDG or DDG could supplement livestock diets. (By-product) N. To feed livestock DDG or WDG, they must be concentrated into fewer sites. (LS density)

Figure 3. Project Environment Diagram (PED) of corn ethanol feedstock production. Squares enclose project activities, ovals enclose biodiversity components.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

104

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Environmental Setting The setting of the corn ethanol scenario is in Canada‘s corn growing region, the OntarioQuebec strip of lowland that borders Lakes Erie and Ontario, and the St. Lawrence River in Quebec. This EIA scenario does not consider land under forest, most of which in eastern Canada is generally not arable land, even as grazing land. In this region the corn ethanol industry is already well established. However, continued growth of the industry could have an agro-ecological impact because this agricultural land is already farmed intensively. Conversely, there is far less natural wildlife habitat that is truly undisturbed than in other parts of Canada. Although this scenario is restricted to Canada‘s corn belt, some grain corn is grown west of Ontario, mostly in Manitoba. It is unclear at this time how much of the western corn is going into ethanol production. In addition to the risks identified for the Ontario-Quebec region, any prairie grain expansion for grain ethanol must take account of risks to wetlands, particularly given the pothole ecosystem which covers much of the prairies (Brooke et al., 2009) that is absent in the east.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Environmental Effects 1. Increased nitrogen fertilizer could lead to ground water pollution and damage to downstream aquatic habitats through nutrient loading (GAO, 2009). 2. Fewer crop rotations will lead to loss of soil organic matter in annually seeded, tilled fields. Soil life form diversity would likely decline. 3. The cultivation of hilly land for corn (or other annual crops) would lead to soil erosion (McLean, 2009). Even when corn is grown using the latest no till methods on flat land, there is some soil erosion. The effect of silt runoff on streams and rivers (GAO, 2009) is a bigger concern in the east, given more humid climate and the higher density of rivers and streams than in the Prairies. 4. The shallow rooting system and a short nutrient uptake period of corn will allow a lot of nitrogen leaching, especially from fields with tile drainage (Howarth et al., 2009). The faster leaching of nitrates through ground water into all water bodies will damage aquatic biodiversity. 5. Tile drainage technology may encourage corn producers to encroach on areas with wetlands and ponds, thus depriving those sites of adequate borders needed by many waterfowl. 6. Field enlargements could lead to encroachment into riparian habitats (GAO, 2009) and the removal or narrowing of the protective tree lines and other vegetation that border streams. These encroachments would damage aquatic wildlife (fish and invertebrates) and bird nesting and feeding sites. 7. The encroachment into farm woodlots would also eliminate the habitat for many mammals, such as deer, and small game animals, partridge, wild turkeys, and rabbits. 8. Converting corn-soybean rotations to continuous corn, a potential option for expanding corn feedstock production, would require major increases in nitrogen fertilizer (Baker and Zahniser, 2007; FAO, 2008), with more nutrient loading of runoff water as a result. This loading effect would alter the balance of aquatic life in all water bodies.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

105

9. More sod breaking, or plowing down pasture, will threaten ground level habitats for ground nesting birds, small mammals, and other invertebrate wildlife such as native pollinators (Lye et al., 2009) and bio-control insects. Soil life forms could also decline in these fields. However, this region has little of such land that could be brought into production. 10. With the displacement of animal-based farms, less organic nitrogen would be available, and farmers would rely more on commercial nitrogen fertilizer. Although excess nitrogen can also come from too much manure, fewer livestock would result in less manure, hence minimizing manure-based pollution. 11. With less manure, a common means of rebuilding soil organic matter will also be reduced, leading to lower soil organic matter and more soil erosion, sediment damage to streams and aquatic biodiversity, and some loss of micro-habitat (bees, bio-control insects, etc). 12. Larger concentrations of livestock in beef feedlots or large hog or poultry operations attracted by either the WDG or DDG by-product could lead to manure concentrations and disposal problems (Dessureault, 2007). Spills or seasonal over-flows from manure storage systems could affect any nearby water bodies.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Benefits Specific to Corn Ethanol The grain used for ethanol feedstock production is the poor quality grains which are mostly unsuitable for either human or livestock (EIC, 2010). As well as the weather damaged or immature grain, tolerance of crops for ethanol with more impurities and pest damage than the same crops used for food or feed could motivate farmers to reduce herbicide and pesticide use. This can reduce the impacts on surface and ground water quality and on aquatic plants and invertebrates (GAO, 2009). Some of the land use change impact risks are partially mitigated by the feed by-product which will reduce the amount of animal production that is displaced by corn ethanol production.

Reduced Impact Matrix Comparisons Figure 4 shows the application of the RIM to the three scenarios. Usually each RIM would be edited after the initial identifying project-environment interactions to reduce the size of the matrix by eliminating any columns or rows which do not show any checkmarks. But because a common set of BD-components was used to compare the three scenarios, the component rows were only eliminated if intersections were not identified in any of the three RIMs. With a common set of rows, the three RIMs could be combined into one diagram. The project activity lists in the respective sub-matrices are the same as used in the PEDs (Figures 1 to 3). The decision to use habitats, rather than affected plants and animals to define BDcomponents precluded ranking of the environmental components and eliminated any quantitative ranking of impacts in the three scenario RIMs. However, with a common set of BD-components, some comparison of the three scenarios is possible based on the number of effects on each BD-component that were identified in each scenario and which project activities gave the most effects in each RIM.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

106

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Projects and project activities Canola-biodiesel - Scenario 1 Cellulosic-ethanol - Scenario 2 A. Expansion A. Crop introduction B. → Displace LS B. → Hybrids C. → Displace crops C. → Sod breaking D. → Sod breaking D. → N-fertilizer E. Intensification E. Wild biomass F. → Hybrids F. ↑ Harvest G. → N-fertilizer G. ↑ Transport H. By-product H. Crop residue I. → LS density I. → Displace LS Biodiversity components wetlands streams & rivers ponds & lakes potholes corridors buffer zones fence rows wind breaks woodlots tilled fields hay fields pasture rangeland soil life forms native plants

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

A

B

C

√

√

√

√

√

√ √ √

√ √ √

D

E

F

√ √ √ √

√

√ √ √

√ √ √ √

G

√ √ √ √

√

H

I

A

B

1 √ √

C

D

√

√ √ √ √

2

3 4 5 6 7 8 9 10 11 12 13 14 15

E

F

G

√

√

H

I 1 2

√

√

√

√ √

√ √ √ √

Corn-ethanol - Scenario 3 A. Intensification B. → N-fertilizer C. Expansion D. → Displace LS E. → → Displace crops F. → Encroachment G. → ↑ land clearing H. → ↑ Enlarge fields I. Tile drainage J. ↑ ↑ Continuous crop K. ↑ Recruitment L. → → Sod breaking M. By-product N. → LS density

√

√

√

√

√ √ √

3 4 5 6 7 8 9 10 11 12 13 14 15

A

B

√ √ √

√ √ √

C

D

E

F

G

H

√

√

√ √ √ √

√

J √ √ √

K

L

M

N √ √

√

√ √

√

I √ √ √

√ √ √

√ √ √

√

√

√ √

√ √

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 4. Combination of Reduced Impact Matrix (RIM) diagrams for three biofuel feedstock projects in Canada.

For canola biodiesel, wetlands and potholes were the most affected BD-components, although the effects on wetlands were quite evenly distributed over all the project activities. Wetlands are worthy of note because they are a particularly biodiverse habitat scattered throughout agricultural landscapes across Canada. For cellulosic ethanol the most affected BD-components were rangeland and native plants, followed closely by wetlands and potholes. For corn ethanol the most affected BD-components were the water bodies: wetlands, streams and rivers, and ponds and lakes. The next most affected pair of BDcomponents in the east was woodlots and native plants. The project activity which affected the most BD-components (7) was Displaced LS in the canola biodiesel EIA, even though this was a secondary activity. This was followed by Displaced Crops, also a secondary activity of canola biodiesel, and by Sod breaking in the cellulosic ethanol EIA, with 6 BD-components each. The next highest ranking activities were Continuous crop in corn ethanol and Expansion in canola biodiesel, both with 5 BDcomponents affected. Cellulosic ethanol resulted in the lowest total number of effects on biodiversity: 23 compared to 38 for corn ethanol and 30 for canola biodiesel. However, the cellulosic ethanol scenario had the highest number of effects on rangeland which, as stated above, is likely the agro-ecosystem habitat with the most biodiversity. Cellulosic ethanol also had the most effects on native plants, largely in the rangeland habitat. While the corn ethanol scenario showed the highest number of effects, this was mostly due to it having more project activities than the other two projects.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

107

DISCUSSION

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Performance of the Methodology The inclusion of Expansion and Intensification in Figures 1 and 3 actually serves as a means of classifying activities. Expansion of feedstock crops was at the root of more of the secondary effects in both of the canola- and corn-based biofuel EIAs than Intensification. Displacement of both crops and livestock result from expansion of feedstock production, rather than intensification in both scenarios. In this context, secondary effects are usually offfarm effects. The two displacement activities encapsulate the role of third party activities. As shown in Figure 1, Intensification can also be a secondary activity. What appear as secondary activities in Figure 2, are, in fact, simply the result of classifying the potential sources of cellulose. The displacement of livestock identified in Figure 2 could be a direct result of harvesting biomass, rather than a secondary (off-farm) activity, since that biomass would otherwise be forage for cattle. Since this industry is just starting, the cellulosic ethanol EIA did not explicitly identify expansion as an activity. But rapid increases in areas dedicated to producing biomass crops are implicit in the expected growth of this industry. While the three PEDs effectively illustrate the decision sequences that lead to environmental effects, a complex appearing diagram does not always mean that there is greater impact. Similarly, a greater number of row-column intersection points in the RIM can also be misleading with respect to the total impact of the project. The activities with the most intersection points in Figure 4 were livestock and crop displacement. The RIM comparisons illustrated the importance of land reallocation. More detailed assessments require that the importance of what is being affected must also be determined. Rating the importance or vulnerability of BD-components requires that this EIA be applied at a sub-regional scale (within agro-ecosystems). The diversity of plant and animal species in each local agro-ecosystem should be inventoried. Then, rather than linking BD-components to habitats, they must be redefined in terms of the vulnerable life forms in each of those habitats. The EIA process fell short of rating, even semi-quantitatively, the potential impacts of those effects on biodiversity. Without better farm-level data, this generic EIA cannot be elevated from a process which simply identifies effects to one that actually quantifies their impacts. The impact levels will also depend on the area-extent of the feedstock crop. The secondary nature of many of the effects suggests that data from the surrounding farms, not just those actually producing feedstock crops, are needed.

Comparing the Three Biofuel Feedstocks Cellulosic ethanol, in spite of having the lowest number of identified effects (Figure 4), could pose as much risk to biodiversity as the other two scenarios. Because of the three biomass sources, cellulosic ethanol was a risk to a wider range of BD-components than the corn- or canola-based biofuels. Most of the effects from cellulosic ethanol were related to rangeland, the most biodiverse habitat among the western agro-ecosystems, and wetlands which are also important sites for biodiversity. Being the most mature of the three industries

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

108

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

and in the most intensively farmed region, corn ethanol has the least potential to expand, other than engulfing the corn already grown as livestock feed. It is likely, therefore, the least threat to biodiversity. Although the cellulosic ethanol industry is still pre-commercial, it has the greatest potential for expansion because it is not limited by grain supply or competition with food. Whereas corn and canola are already used in the livestock and food industry, cellulosic feedstock options raise many new crop choices and harvesting questions. Its scale of implementation would dwarf the other two biofuel industries. With fewer effects being secondary compared to canola biodiesel and corn ethanol, and being at an earlier development stage, the cellulosic ethanol industry perhaps also has the most potential to be directed on a biodiversity-compatible and sustainable path of development. In spite of the lower energy efficiency of corn ethanol, the impact of this industry on the biodiversity in its region appears to be relatively benign. The corn ethanol EIA represents the downstream application of assessment, as this industry is well established with little room for growth. Even scrutinizing corn production practices (whether for ethanol or livestock feed) for opportunities to mitigate effects would be following the lead from Ontario Farm Plans (OMAFRA, 1998). The canola biodiesel assessment fits somewhere between the two ethanol timelines since this industry is still in the early growth stage in Canada, but is based on a well established crop with viable market value.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The Feedstock Food Production Interface While the scope of this EIA did not address food security, the reallocation of land between feedstock and food production is the basis of most secondary effects. Governments cannot develop a sustainable biofuels program without looking at agriculture as a whole (Murphy, 2008). Measures to safeguard biodiversity from feedstock production cannot be evaluated in isolation of food- and feed-based agriculture. Many of the impacts of feedstock production on biodiversity are not inherent to biofuels alone, but are unintended side-effects of many intensive and inappropriate agricultural practices, systems, and policies (FAO, 2008; IRGC, 2008), and the environmental effects are the same for both (Howarth et al., 2009). This is evident from the number of secondary effects observed in this chapter.

CONCLUSIONS Responding to Secondary Effects The relationships among land uses that determine the secondary activities, which in turn drove the domino effect leading to secondary effects, is (as evident in the three PEDs) highly complex. The strong role played by secondary activities in defining secondary effects is an indication of how difficult it is to separate biofuel feedstock production from food production. These secondary effects are the result of decisions taken by farmers that are not growing the corn and canola for biofuel feedstock. The greatest threat from the domino effect is from canola biodiesel.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

An Environmental Impact Assessment of Biofuel Feedstock Production…

109

Secondary activities pose a regulatory problem in trying to control secondary effects. The farmers who are causing the secondary impacts are not the farmers producing biofuel feedstock. One way of interpreting the human side of this situation is that the latter farmers are like third parties in a legal dispute - how can they be held responsible when they are not profiting from the biofuel industry? Even without quantifying such secondary effects, enough is known about these third-party (secondary activity) domino effects to recognize the integral nature of biofuel feedstock production and food production. Biofuel policies must evolve with all areas of agricultural planning and development.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Future Directions An analysis of the market forces that determine the direction of the land use pressures should be considered. For example, will Canadian beef producers react to less high quality hay or grazing land by finding other sources of forage, or by reducing their herd sizes? The answer depends on beef prices throughout North America, if not globally, and changes with time. At stake is the grazing pressure on rangeland. There is a need to determine the relative quantities of cellulosic feedstock that could be harvested from the three potential agricultural biomass sources: crop residue, introduced perennials, and native prairie vegetation. It is the latter two that are the largest threat to biodiversity in cellulosic ethanol. This EIA generated a separate list of the potential effects on biodiversity from feedstock production for each of the three most important biofuel industries. Although the impacts of these effects could not be quantified or equated to the carbon footprint of these industries, each potential effect could be the focus of a preventive or mitigation measure for its specific feedstock. These lists could also be the basis of more spatially detailed assessments of future regional biofuel feedstock enterprises, without repeating the RIM or PED procedures. Specifying the project activities gives a more clear indication of the targets for mitigation. The demonstration of the EIA method in this chapter may serve as a starting point for planners in other regions, countries or biofuel industries. Even though it did not follow the biofuel life cycle from field to fuel tank, this EIA methodology can contribute to more holistic LCA of biofuels.

Mitigation of Biodiversity Impacts Biofuel production is driven by the near total dependency of the transport sector on liquid fossil fuel (Karman et al., 2008). Since the consensus is that most biofuel industries provide a net reduction of fossil CO2 emissions, and in most cases, a net gain in energy, biofuels will likely retain their role in the energy sector (Klein and LeRoy, 2007). Ideally, the decision to support feedstock production should consider other uses of the same land, such as tree plantations to sequester carbon (TRS, 2008). Unfortunately, biodiversity impacts are unlikely to carry the economic or political weight needed to terminate most biofuel projects. But approving or terminating a development project is not the only outcome of an EIA. As well as identifying potential impacts, mitigating these effects is a major EIA function (IRGC, 2008). Given the higher policy profile of the energy and GHG questions compared to biodiversity, mitigation is a more practical option than prohibition for ensuring that GHG

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

110

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

emissions are not reduced at the cost of biodiversity (UNEP, 2009). Although specific mitigation measures must await more detailed EIA, several policy imperatives have emerged. The first policy imperative is that, at least with respect to biofuels, the GHG emission status will take precedent over biodiversity concerns. The second imperative is that biodiversity concerns will not have the weight to alter policies that promote biofuels. The latitude for mitigation of effects on biodiversity, which is clouded by uncertainty of the magnitude and direction of effects, is therefore limited. Whether or not any risks posed by biofuel feedstock production can be mitigated, the challenges to agricultural policy makers are little different than those they will face from the increasing global demand for food and protein. Biofuel production will force us to face these challenges somewhat sooner than we would have to if the only driving force was the growing demand for food. In both cases, the limit to growth is the fixed quantity of arable land. Biofuels are neither a panacea solution to transport fuels, nor a direct threat to biodiversity, but rather, one of the potential energy pathways in the mix of energy sources that must eventually replace liquid fossil fuels. However, biodiversity must be one of the considerations that define the future role of liquid biofuels.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

REFERENCES AAFC. 2007a. Prairie Shelterbelt Program. Agriculture and Agri-Food Canada (http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1180103439791andlang= eng). AAFC. 2007b. Livestock Grazing, Wildlife and Biodiversity. Agriculture and Agri-Food Canada (http://www4.agr.gc.ca/AAFC-AAC/display-afficher.do?id=1186587208617 andlang=eng). AAFC. 2008. Agroforestry. Agriculture and Agri-Food Canada (http://www4.agr.gc.ca/ AAFC-AAC/display-afficher.do?id=1177431400694andlang=eng). AAFC. 2010. Government of Canada Invests in Cellulosic Biofuels Research. Agriculture and Agri-Food Canada (AAFC) Press Release, January 22, 2010. www.aafc.gc.ca. Auld, D. 2008. The Ethanol Trap: Why Policies to Promote Ethanol as Fuel Need Rethinking. C.D. Howe Institute Commentary 268, July 2008. ISSN 1703-0765 (online). 20 pp. www.cdhowe.org. Baker, A. and S. Zahniser. 2007. Ethanol Reshapes the Corn Market. AmberWaves May 2007 Special Issue. http://www.ers.usda.gov/AmberWaves/May07SpecialIssue/ Features/Ethanol.htm. Bakermans, M.H. and A.D. Rodewald. 2002. Enhancing Wildlife Habitat on Farmlands. Ohio State University Extension Fact Sheet. W-14-2002. http://ohioline.osu.edu/wfact/0014.html. Accessed 4 October 2010. Barney, J.N. and J.M. Ditomaso. 2008. Nonnative species and bioenergy: Are we cultivating the next invader? Bioscience. 58: 64-70. Barney, J.N. and J.M. Ditomaso. 2010. Bioclimatic predictions of habitat suitability for the biofuel switchgrass in North America under current and future climate scenarios. Biomass and Bioenergy. 34: 124-133.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

An Environmental Impact Assessment of Biofuel Feedstock Production…

111

Belausteguigoitia, J.C. 2004. Causal Chain Analysis and Root Causes: The GIWA Approach Ambio - A Journal of the Human Environment. 33(1–2): 7-12. Royal Swedish Academy of Sciences , Feb. 2004. http://www.ambio.kva.se. Bisset, R. 1980. Methods for environmental impact analysis: recent trends and future prospects. Journal of Environmental Management. 11: 27-43. Bohlen, P.J. 2008. Can agriculture fuel the world? Members Forum. Society and Policy News. Crop Science Society of America. CSA News. 53(6):15. Bradley, D. 2008. Canada Report on Bioenergy 2008. Prepared for Environment Canada as required by IEA Task 40- Biotrade. By Climate Change Solutions, Ottawa (Member- IEA Bioenergy Task 40- Biotrade). www.climatechangesolutions.net. Bringezu, S., H. Schütz, M. O´Brien, L. Kauppi, R.W. Howarth, and J. McNeely. 2009. Towards Sustainable Production and Use of Resources: Assessing Biofuels. United Nations Environment Programme (UNEP). Brooke, R., G. Fogel, A. Glaser, E. Griffin, and K. Johnson. 2009. Corn Ethanol and Wildlife: How are Policy and Market Driven Increases in Corn Plantings Affecting Habitat and Wildlife? University of Michigan, School of Natural Resources and Environment. Masters Thesis. (http://hdl.handle.net/2027.42/62096). Casséus, L. 2009. Canola: a Canadian success story. In: Canadian Agriculture at a Glance, Census of Agriculture. Statistics Canada, 96-325-X, Table 1, Canola seeded area, census years 2006 and 2001. CCC. 2009. Growing fuel - fuelling growth. Canola Council of Canada (CCC). http://www.canola-council.org/biodiesel/. CCCM. 2010. Fueling a New Economy: Exploring the Opportunities of Ethanol Production in Manitoba. Climate Change Connection, Government of Manitoba (CCCM) publications www.climatechangeconnection.org/Resources/documents/ethanol.pdf. Accessed 21 January 2010. CLWS. 1994. Ecological Woodlot Management. Produced by The Centre for Land and Water Stewardship (CLWS), University of Guelph, June, 1994. http://www.carolinian.org/ FactSheets_WoodlotMgmt.htm. Accessed 4 October 2010. CRFA. 2009. Ethanol Production. Canadian Renewable Fuels Association (CRFA) http://www.sentex.net/~crfa/ethaprod.html/. Dessureault, L. 2007. Canada Bio-Fuels - Bio Fuels Canada 2007. GAIN Report Number: CA7041, Date: 8/17/2007. 31pp. Global Agriculture Information Network (GAIN), USDA Foreign Agricultural Service. Doolen, R. 1998. Shrubby Fencerows make good Neighbors. Missouri Conservationist. 59(5). Missouri Department of Conservation. http://mdc.mo.gov/conmag/1998/ 05/50.htm. Accessed 1 March 2010. Dornburg, V., A. Faaij, P. Verweij, H. Langeveld, G. van de Ven, F. Wester, H. van Keulen, K. van Diepen, M. Meeusen, M. Banse, J. Ros, D. van Vuuren, G.J. van den Born, M. van Oorschot, F. Smout, J. van Vliet, H. Aiking, M. Londo, H. Mozaffarian, and K. Smekens. 2008. Assessment of global biomass potentials and their links to food, water, biodiversity, energy demand and economy. Netherlands Environmental Assessment Agency, MNP, Bilthoven. Duffy, M.D. and V.Y. Nanhou. 2002. Costs of producing switchgrass for biomass in southern Iowa. p. 267–275. In: J. Janick and A. Whipkey (eds.), Trends in new crops and new

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

112

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

uses. ASHS Press, Alexandria, VA. http://www.hort.purdue.edu/newcrop/ncnu02/v5267.html Dyer, J.A. 1982. Comments on the sustainability of the Canadian agro-food system. Canadian Farm Economics. 17(3): 23-28. Dyer, J.A. 1993. Methods of Environmental Impact Assessment for Agriculture - A Review. Un-published report prepared for the Environment Bureau, Agriculture and Agri-food Canada (AAFC), in support of the training program of AAFC staff in compliance with the Canadian Environmental Assessment Act. Available from the senior author. 32pp. Dyer, J.A. 1998. Business Plan for Niche Market Development of Minor or Heritage Crops. Prepared for Seeds of Diversity Canada (SoDC) in fulfilment of the terms of the AFT2000 Program, Project Number 4242-1/97-98/8252, Agriculture and Agri-food Canada. 53pp. Dyer, J.A. 2009. An examination of the Impacts of Production and Use of Liquid Biofuels for Transportation on Biodiversity. Prepared in compliance with Project: K2A24-08-0013. Contract Authority: Dr. Ole Hendrickson, Environmental Stewardship Branch, Environment Canada, Gatineau, PQ. First draft submitted October 2008, revised report submitted December 2009. 42 pp. Dyer, J.A. and R.L. Desjardins. 2009. A review and evaluation of fossil energy and carbon dioxide emissions in Canadian agriculture. Journal of Sustainable Agriculture. 33(2): 210-228. Dyer, J.A. and V. Pataridze. 1996. A Handbook for Environmental Impact Assessment in Agricultural Development - Using the Canadian Model and Experience for Invironmental Impact Assesment (Eco-Socio Aspects) in Ukraine. Prepared under the Canada Ukraine Partnership Program at the State Academy of Agriculture and Ecology of Ukraine, Zhytomyr. 20pp. (Translated to Russian). Dyer, J.A., S.N. Kulshreshtha, B.G. McConkey, and R.L. Desjardins. 2010a. An assessment of fossil fuel energy use and CO2 emissions from farm field operations using a regional level crop and land use database for Canada. Energy. 35(5):2261-2269. Dyer, J.A., X.P.C. Vergé, R.L. Desjardins, D.E. Worth, and B.G. McConkey. 2010b. The impact of Increased Biodiesel Production on the Greenhouse Gas Emissions from Field Crops in Canada. Energy for Sustainable Development. 34(6): 618-629. EIC. 2010. Fuel ethanol and food supply. The Ethanol Info Centre (EIC). http://www.sentex.net/~crfa/ethafood.html. Accessed 21 January 2010 EPM. 2007. Ethanol Plants. Ethanol Producer Magazine (EPM) http://www.ethanolproducer. com/plant-list.jsp?country=Canada. Accessed 22 January 2007. ESWG. 1995. A National Ecological Framework for Canada. Ecological Stratification Working Group (ESWG), Agriculture and Agri-food Canada, Research Branch, Centre for Biological Resources Research and Environment Canada, State of Environment Directorate, Ecozone Analysis Branch. Ottawa/Hull. Report and National Map at 1:7,500,000 scale. FAO. 2008. Biofuels: Prospects, Risks and Opportunities. The State of Food and Agriculture. Food and Agriculture Organization of the United Nations (FAO). Rome, Italy. ISSN 0081-4539, ISBN 978-92-5-105980-7. 138 pp. Fischoff, B., P. Slovac, and S. Liechtensein. 1978. Fault trees: sensitivity of estimated failure probabilities to problem representation. Journal of Experimental Psychology: Human Perception and Performance. 4(2): 330-344.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

An Environmental Impact Assessment of Biofuel Feedstock Production…

113

Foster, B.L., K. Kindscher, G.R. Houseman, and C.A. Murphy. 2009. Effects of hay management and native species sowing on grassland community structure, biomass, and restoration. Ecological Applications. 19(7): 1884-1896. Fox, C.A. 2007. Soil Biodiversity Indicator. In: Environmental Sustainability of Canadian Agriculture: Agri-Environmental Indicator Report Series—Report #2, F. Biodiversity. Pg 171-173. 2007-02-22. http://www4.agr.gc.ca/resources chap27_e.pdf. GAO. 2009. Biofuels - Potential Effects and Challenges of Required Increases in Production and Use. Report to Congressional Requesters. United States Government Accountability Office (GAO). August 2009. GAO-09-446. 184 pp. Gonzalez-Hernandez, J.L., G. Sarath, J.M. Stein, V. Owens, K. Gedye, and A. Boe. 2009. A multiple species approach to biomass production from native herbaceous perennial feedstocks. In Vitro Cellular and Developmental Biology. 45: 267-281. Groom, M.J., E.M. Gray, and P.A. Townsend. 2008. Biofuels and Biodiversity: Principles for Creating Better Policies for Biofuel Production. Conservation Biology. DOI: 10.1111/j.1523-1739.2007.00879.x 8pp. Hodge, N. 2008. Cellulosic Ethanol Companies - New Hope for Biofuels. GreenChip Revue. http://www.greenchipstocks.com/articles/cellulosic-ethanol-companies/205. January 31st, 2008. Howarth, R.W., S. Bringezu, M. Bekunda, C. de Fraiture, L. Maene, L. Martinelli, and O. Sala. 2009. Rapid assessment on biofuels and environment: overview and key findings. Pages 1-13 In: Biofuels: Environmental Consequences and Interactions with Changing Land Use. In: Proceedings of the Scientific Committee on Problems of the Environment (SCOPE) International Biofuels Project Rapid Assessment, 22-25 September 2008, Gummersbach Germany, R.W. Howarth and S. Bringezu (eds). Cornell University, Ithaca NY, USA. (http://cip.cornell.edu/biofuels/). Informa. 2006. Biodiesel Demand Implications for WCE Canola Futures. September 2006. From: Informa Economics Inc. Retrieved October 16, 2006. http://www.wce.ca/ NewsNotices.aspx?first=informaarticlesandlast=2006. IRGC. 2008. Policy Brief - Risk Governance Guidelines for Bioenergy Policies, International Risk Governance Council (IRGC), Geneva, 2008. ISBN 978-2-9700631-0-0. 68 pp. Karman, D., D. Rowlands, N. Patterson, and M. Smith. 2008. Technical and Policy Implications of Transportation Biofuel Regulatory Approaches - Final Report. Submitted to: Natural Resources Canada. By: Carleton University, Ottawa, July 2008. 164pp. Kelley, Paul, personal communication (2010). VP Manufacturing, Iogen Corporation. Ottawa, Ontario, Canada. www.iogen.ca. Klein, K.K. and D.G. LeRoy. 2007. The Biofuels Frenzy: What‘s in it for Canadian Agriculture? Green Paper Prepared for the Alberta Institute of Agrologists. Presented at the Annual Conference of Alberta Institute of Agrologists. Banf, Alberta, March 28, 2007. Department of Economics, University of Lethbridge. 46 pp. Klein, K., R. Romain, M. Olar, and N. Bergeron. 2004. Ethanol Policies, Programs and Production in Canada. Presented at the Agriculture as a Producer and Consumer of Energy Conference, June 24-25, 2004, Sponsored by Farm Foundation and USDA‘s Office of Energy Policy and New Uses. Lafond, G.P., M. Stumborg, R. Lemke, W.E. May, C.B. Holzapfel, and C.A. Campbell. 2009. Quantifying Straw Removal through Bailing and Measuring the Long-Term Impact on Soil Quality and Wheat Production. Agronomy Journal. 101: 529-537.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

114

J. A. Dyer, O. Q. Hendrickson, R. L. Desjardins et al.

Lee, E. and R. Elsam, 2008. Fuelling the ecological crisis - six examples of habitat destruction driven by biofuels. BirdLife International. May 2008. http://www.rspb.org.uk or http://europe.birdlife.org. Leopold, L., F.E. Clarke, B.B.Hanshaw, J.R. Balsey. 1971. A procedure for evaluating environmrntal impact. U.S. Geol. Survey Circ. 645. Washington D.C. U.S. Geological Survey. Lye, G., K. Park, J. Osborne, J. Holland, and D. Goulson. 2009. Assessing the value of Rural Stewardship schemes for providing foraging resources and nesting habitat for bumblebee queens (Hymenoptera: Apidae) Biological Conservation. 142: 2023-2032. Malcolm, S. and M. Aillery. 2009. Growing crops for biofuels has spillover effects. Amber Waves. 7(1): 10-15. March. McKague, K. 2009. On-Farm Biodiesel Production. OMAFRA, http://www.omafra.gov. on.ca/english/engineer/facts/biodiesel.htm. Creation Date: 04 March 2009. McLean, L. 2009. Canadian ethanol - Examining our environmental footprint. Ontario Corn Producer Magazine. September 2009. http://corn.teksavvy.com/index.php?option=com_ contentandview=articleandid=6andItemid=5. Murphy, S. 2008. The multilateral trade and investment context for biofuels: Issues and challenges. International Institute for Environment and Development (IIED), London and Institute for Agriculture and Trade Policy (IATP), Minneapolis. 32pp. www.iatp.org. /or/www.tradeobservatory.com. Neumann, M., I. Bruce, and Associates. 1992. Farm Forestry and Habitat Management. Best Management Practices. Agriculture Canada and Ontario Ministry of Agriculture and Food. 41 pp. OMAFRA. 2009a. Infosheet #22: Wetlands and Wildlife Ponds. Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). http://www.omafra.gov.on.ca/english/ environment/efp/infosheet_22.htm. OMAFRA. 2009b. Infosheet #23: Woodlands and Wildlife. Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). (http://www.omafra.gov.on.ca/english/ environment/efp/infosheet_23.htm). OMAFRA. 1998. Canada-Ontario Environmental Farm Plan. Agriculture and Agri-Food Canada (AAFC) and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). http://www.omafra.gov.on.ca/english/environment/efp/efp.htm. Created: 01 November 1998. Last Reviewed: 11 February 2010. Paustian, K., J.M. Antle, J. Sheehan, and E.A. Paul. 2006. Bioenergy From Agricultural Lands, pages 40-57, Chapter IV. In: Agriculture‘s Role in Greenhouse Gas Mitigation. Prepared for the PEW Center on Global Climate Change. September 2006. 87 pp. PCAB. 2010. Guide to the Canada – Saskatchewan Farm Stewardship Program (CSFSP). Provincial Council of Agricultural Development and Diversification Board (http://saskpcab.com/wp/wp-content/uploads/2010/03/GUIDE_final_201002192.pdf). PCAP. 2008. Riparian Health Assessment for Lakes, Sloughs and Wetlands. Saskatchewan Prairie Conservation Action Plan. Regina, SK. 106 pp. (http://www.swa.ca/Publications/ Documents/LakesSloughsWetlandsRiparianHealthAssessmentFieldWorkbook.pdf). Pelletier, N., N. Arsenault, P. and Tyedmers. 2008. Scenario Modeling Potential EcoEfficiency Gains from a Transition to Organic Agriculture: Life Cycle Perspectives on Canadian Canola, Corn, Soy, and Wheat Production. Environmental Management. 42: 989–1001.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

An Environmental Impact Assessment of Biofuel Feedstock Production…

115

Peña, N. 2008. Biofuels for Transportation: A Climate Perspective. Solutions White Paper Series. PEW Center on Global Climate Change. June 2008. Peak Oil. 2009. Will 'Energy Crops' Become the Next Kudzu? Peak Oil News and Message Board. http://peakoil.com/index.php. Accessed 12 August 2009. Raghu, S., R.C. Anderson, C.C. Daehler, A.S. Davis, R.N. Wiedenmann, D. Simberloff, and R.N. Mack. 2006. Adding biofuels to the invasive species fire? Science. 313: 1742-1742. Sala, O. E., D. Sax, and L. Leslie. 2009. Biodiversity Consequences of Increased Biofuel Production. In: R. W. Howarth and S. Bringezu (eds.) Biofuels: Environmental Consequences and Interactions with Changing Land Use. Report of the Internatinal SCOPE Biofuels Project. Searchinger, T, R, Heimlich, R.A. Houghton, F. Dong, A. Elopeid, J. Fabiosa, S. Tokgoz, D. Hayes, T-H. Yu. 2008. Use of U.S. croplands for biofuels - increases in greenhouse gases through emissions from land use change. Sciencexpress Report Published online 7 February 2008; 10.1126/science.1151861. www.sciencexpress.org, 6 pp. Sparling, B., D. Bucknell, and L. Martin. 2007. The Importance of Fertilizer to Biofuels in Canada. Discussion Paper. Prepared for: Canadian Fertilizer Institute, Ottawa, by: George Morris Centre, Guelph, Ontario. January 26, 2007. 20 pp. Statistics Canada. 2001. Field Crop Reporting Series, No. 8: November estimate of production of principal field crops, Canada, 1990–2004. Statistics Canada Catalogue No: 22 9-002-XIB, Volume 80, No. 8. Ottawa, Canada. TRS. 2008. Sustainable biofuels: prospects and challenges. The Royal Society (TRS), Policy document 01/08, January 2008, ISBN 978 0 85403 662 2. 90 pp. www.royalsociety.org. UNEP. 2009. Towards Sustainable Production and use of resources: Assessing Biofuels. United Nations Environmental Program (UNEP). ISBN 978-92-807-3052-4. 120 pp. Vander-Griend, D. 2010. Ethanol Production Process. ICM, Inc. www.icminc.com/ethanol production_process. Accessed 21 January 2010. von Blottnitz, H. and M.A. Cunan . 2007. A review of assessments conducted on bio-ethanol as a transportation fuel from a net energy, greenhouse gas, and environmental life cycle perspective. Journal of Cleaner Production. l5: 607-619. Wright, D.S. and G.D. Greene. 1986. An environmental impact assessment methodology for major resource developments. Journal of Environmental Management. 24:1-16.a

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 117-142

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 4

SOME EXPLORATIONS INTO ZAMBIA‟S POST-INDEPENDENT POLICIES FOR FOOD SECURITY AND POVERTY REDUCTION Richard J. Culas1 and Munir A. Hanjra2 1

School of Agricultural and Wine Sciences Charles Sturt University, Orange NSW 2800, Australia 2 International Centre of Water for Food Security Charles Sturt University, Wagga Wagga, NSW 2678, Australia

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ABSTRACT Sub-Saharan Africa is burdened with poverty and food security. Eradication of extreme poverty and hunger is a key Millennium Development Goal. Many African governments have pursued economic reforms and agricultural policy interventions in a quest to accelerate economic growth that contributes to poverty reduction. Taking Zambia as a case example the agricultural policy interventions are examined for the period 1964-2008, to better understand their likely impacts on food security and poverty. The analysis shows that past interventions created perverse incentives for farmers and had mixed effects on enhancing the production of stable foods such as maize. The potential of agriculture to generate a more pro-poor growth process depends on the creation of new market opportunities that benefit the poor the most. The state should encourage private sector activity and investments for addressing infrastructure constraints to improve market access and accelerate more pro-poor growth through renewed investments in agricultural research and extension.

Keywords: Maize, fertilizer, credit, subsidy, smallholder, food security, poverty, Zambia.



For correspondence: School of Agricultural and Wine Sciences, Charles Sturt University, PO Box 883, Orange, NSW 2800 Australia. Telephone: +61 2 6365 7834; Fax: +61 2 6365 7578. E-mail: [email protected].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

118

Richard J. Culas and Munir A. Hanjra

1. INTRODUCTION

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The eradication of extreme poverty and hunger is a key priority in Sub-Saharan Africa. Zambia is one of the poorest counties in Sub-Saharan Africa, a continent which will fall short of achieving all the Millennium Development Goals by 2015 (Chen and Ravallion, 2007; Easterly, 2009). Zambia ranks sixth among the Sub-Saharan African countries in terms of purchasing power adjusted GDP per capita (World Bank, 2008). But Zambia ranks at 164 number out of 182 countries based on the United Nations (UNDP, 2010) Human Development Index – a multidimensional indicator for human poverty showing over all level of human wellbeing, capturing education, life expectancy, and GDP per capita. It ranks even lower based on the Gender Development Index (GDI), implying marked inequalities in human development among men and women. Inequality fell dramatically during the 1990s but remains high. For instance, the Gini coefficient (an indicator of inequality) was 0.48 in 1959, 0.59 in 1974 and 1991, and 0.49 in 1998 (World Bank, 2009). Rural areas have higher inequality than urban areas. Poverty was high in the initial period (1974), rose rapidly by 1996 and then declined somewhat. Poverty incidence, depth, and severity (Blackwood and Lynch, 1994) all have remained higher in rural than urban areas. For instance poverty incidence is 74% in rural areas against 52% in urban areas (World Bank, 2009). The country has slipped in its international ranking on the HDI; out of 177 countries Zambia was ranked at number 153 in 2002 before slipping further down to 165 in 2006 (UNDP, 2006). Between 1990 and 2007 Zambia‘s HDI fell by -0.17% annually from 0.495 to 0.481 today (Figure 1) (UNDP, 2010). These data suggest that poverty and food security are strategic issues in Zambia which cannot be addressed with business as usual investments in agricultural policy reforms for economic growth (Fukuda-Parr, 2004).

Figure 1. Trends in Human Development Index of Zambia, compared with Sub-Saharan Africa and other regions of the world showing Zambia low rank but recent progress in HDI. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Some Explorations into Zambia‘s Post-Independent Policies for Food…

119

Zambia has continued to implement its economic reforms launched in 1991. Recently the reforms have consolidated the substantial market liberalization efforts made during the 1990s, and emphasized poverty reduction (Gibson, 2004). The trade regime has been further liberalized under its ongoing economic reforms. Macroeconomic performance has not been good, and continued decline in copper production has led to the fall in investments and low economic growth of around 1% per year during the 1990s (World Bank, 2009). Zambia‘s diversification process has not yet taken hold, and mining exports centred on copper still account for 70% of the total value of exports and around 6% of real GDP (WTO, 2002). Agriculture, including livestock, forestry and fishing account for about 17% of real GDP and over 70% of employment. Manufacturing adds around 18% to real GDP, and services nearly 60% (World Bank, 2009). Health issues such as malaria and HIV/AIDS have also compound its development challenges (Matangi, 2006). Agriculture sector is dominated by small scale farmers and is the largest employer; these smallholders are prone to food insecurity and poverty. In terms of output, however, the commercial farms account for about 40% of national maize production, for most of Zambia‘s wheat, soyabeans and export vegetables such that the nationally optimal policy settings might cut against the smallholders. Farming is largely based on traditional methods and continues to be subsistence oriented. It is characterized by low productivity and the output is dependent on weather conditions. Infrastructure shortfalls are crippling in rural areas. Zambia‘s vast potential in agriculture remains largely as unexploited. For instance, just 6% of the available water resources are withdrawn for agriculture (Gleick, 2003) such that crop production remains dependent on rainfall. Zambia‘s agricultural policy is aimed at food security, poverty reduction, and support for staple crops and promotion of cash crops (mainly as non-traditional exports). A variety of crops are produced but maize is the dominant crop in Zambia. Small scale farmers hold nearly two-third of the agricultural land, and the number of households in this category has been increasing. This indicates that agricultural policies need to be made more effective by increasing their production and thereby contributing to agricultural growth that reduces poverty faster. Recently, a closer attention has been paid to the vast majority of farmers who are small scale producers of maize and other crops. This process identified shortcomings in the agricultural liberalization programs in operation since 1989, and did remove quantitative restrictions on imports, eliminated subsidies and monopoly marketing boards for agricultural inputs and outputs and deregulated prices. However little was done to encourage the private sector to fill the gap in service delivery left by these reforms, and this sent mixed signals to markets and smallholders. Main areas of policy weakness identified were (Jayne et al., 2006a; Sandbrook, 1996): the rapid pace of agricultural policy reforms without transitional support measures to mitigate the change; lack of complimentary policies to harness the reforms; lack of sequencing and packaging the reforms; inadequate funding for agricultural services; and blurred policy statements from some politicians. This chapter presents empirical evidence from secondary sources as well as a case study concentrating on the impact of agricultural reform policies on maize production and farming systems development in Northern Province of Zambia. Policy measures are suggested to reduce poverty faster through a more pro-poor growth process and improvement in farm productivity and agricultural development in the country.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

120

Richard J. Culas and Munir A. Hanjra

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

2. ECONOMIC REFORMS Zambia was a middle income country in the 1960s believed to have considerable potential for economic growth and poverty reduction. Its poor economic performance and low development must be seen in its natural endowments and policy interventions. Low population density, abundant land, and considerable rainfall meant high agricultural potential; however its economy was a hostage to copper mining for almost a century marked by the discovery, boom, and eventual bust of the mineral sector (Copestake and Weston, 2000; Copestake, 2002b). Investments were largely concentrated in this sector, with little investment in rural infrastructure and agriculture, and this policy still underpins the ruralurban divide and low economic development in Zambia. Zambia underwent three distinct policy regimes: interventionism and failed reforms, 1965-1990; comprehensive structural adjustment program, 1991-1998; and renewed growth reforms 1999-2002, with varied implications for economic growth and social development (Table 1) (World Bank et al., 2005; World Bank et al., 2004). The fourth policy regime is propoor growth of around 1% per year during the 1990s (World Bank, 2009). Zambia‘s diversification process has not yet taken hold, and mining exports centred on copper still account for 70% of the total value of exports and around 6% of real GDP (WTO, 2002). Agriculture, including livestock, forestry and fishing account for about 17% of real GDP and over 70% of employment. Manufacturing adds around 18% to real GDP, and services nearly 60% (World Bank, 2009). Health issues such as malaria and HIV/AIDS have also compound its development challenges (Matangi, 2006). Zambia opted for a market economy (1964-72), favouring mining and urban areas, few people benefited in rural areas and inequality worsened. Market economy policies were abandoned in the early 1970s and replaced by state control (1973-84), with nationalization of copper mines and expansion of state-owned enterprises (Gleick, 2003). Regulatory policies, producer subsidies and fixed consumer prices protected the urban consumers and further entrenched urban bias. This interventionist strategy achieved little growth and was widely regarded as a failure, and led Zambia to implement its first structural adjustment program in 1978. Producer and consumer subsidies declined to 20% of fiscal budget by mid 1980s, and Zambia entered a period of economic transition (1985-1990) and attempted the second structural adjustment program to correct the price distortions and diversify into agriculture (World Bank et al., 2005). Following unrest in urban areas, the reforms were backtracked, and a new set of interventions were implemented, involving a partial return to command-andcontrol economy. As the economy went into recession in 1989, the third structural adjustment program was commissioned in which prices of all goods were decontrolled except for maize and fertilizer. Urban bias again mattered and the program was backtracked; maize and fertilizer reforms were stopped (Kydd, 1998). Agricultural policies favoured urban consumers, and rural development policies involved price controls, thereby undermining agricultural diversification (World Bank et al., 2005; World Bank et al., 2004). Incomes fell, poverty and inequality rose and gains in social outcomes were reversed by 1991 (World Bank, 2008).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

121

Table 1. Policy interventions and socioeconomic outcomes in Zambia Indicators

Policy intervention

1964-72 Market economy Macroeconomic Indicators GDP per capita (1995 local currency) Exports (1995 $US) Imports (1995 $US) Fixed capital formation (1995 local currency) External debt (1995 $US) Inflation (deflator) Exchange rate (to $US) Real interest rate (%)

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Social Indicators Life expectancy (years)

1973-84 State control

1985-90 Economic transition

Structural adjustment program 1991-98 Structural adjustment

Renewed growth reforms 1999-02 renewed growth

Average annual change (%) 2.1

-2.6

-1.4

-2.4

1.9

3.4 8.0

-1.8 -8.6

-3.4 2.4

4.3 1.3

6.5 2.9

-

-8.7

-1.0

6.3

11.0

6.9 0.0

10.8 11.4 9.0

14.8 67.8 69.4

0.9 71.7 76.2

-6.5 23.9 24.9

0.9

13.4

45.8

38.5

111.3 72.7

112.0 77.3

9.5 -1.1 -25.4 Average value for the period

45.8 49.9 49.7 Infant mortality (per 1000 births) 111.8 96.3 103.7 Adult literacy (%) 48.7 56.7 65.7 Data source: World Development Indicators (World Bank, 2009).

Structural adjustment program started in 1991; the fourth structural adjustment program (SAP) involved macroeconomic stabilization, privatization of state assets, public sector reform, agricultural reforms (Kurukulasuriya et al., 2006) and regulation of banking sector (Jayne et al., 2006b). The liberalization of agricultural markets was a key component of the reform package (Hill and Mcpherson, 2004). Previously Zambia favored maize production through pan-territorial pricing1 (Masters and Nuppenau, 1993), input and output marketing subsidies, and food subsidies to urban consumers. The new package in 1991 attempted to eliminate food subsidies and reduce state intervention in the maize and fertilizer sectors. Consequently food prices increased substantially and led to considerable resistance in urban 1

Pan-territorial pricing system (uniform producer pricing system) for maize was introduced in Zambia in 1974; this means setting of producer prices for maize at the same level throughout the country for all times of the year until the next harvesting season. This has encouraged production in remote areas, such as the parts of Northern and Eastern provinces, where maize production would otherwise not be economically viable. Whereas, the equity pricing is regional pricing for maize, and the equity advantages of regional pricing obtained through either regulating the maize grain market or setting consumer prices within a region. However, such pricing may not be Pareto-Optimal and competitive pricing may raise aggregate welfare by increasing consumer and producer surplus while improving income distribution by favouring the smallholder farmers in southern deficit areas and urban consumers in northern surplus areas.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

122

Richard J. Culas and Munir A. Hanjra

areas (Hill and Mcpherson, 2004; Pereira, 1993). Prolonged and severe drought in Zambia since 1992 caused further increase in maize prices, halted the reform process and saw the government intervention again into maize and fertilizer market. Anyhow the SAP reforms were completed by 1995 (World Bank et al., 2005; World Bank et al., 2004). Structural adjustment program has a negative impact on poverty, with poverty rising sharply during 1991-1996, and a relatively small decrease in poverty subsequently (Table 2) (Jayne et al., 2006a; Sandbrook, 1996). Possibly the major drought of the early 1990s contributed to these movements, in addition to the other factors and specific policy changes implemented by the Zambian government. The incidence of poverty rose, while the depth and severity of poverty fell during the structural adjustment program. Inequality fell initially and later stabilized. Increase in poverty while inequality fell means that substantial structural and distributional changes took place during the reform period, and the reform benefited the poorest and most unequal segment of the society, namely urban consumer (Winters, 2004).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 2. Poverty and inequality in Zambia Structural adjustment program 1991 1996

1998

Poverty (upper poverty line) Incidence Depth Severity

68.9 41.7 30.6

79.4 45.4 30.7

75.4 40.0 25.6

Extreme poverty (lower poverty line) Incidence Depth Severity

56.5 32.4 23.2

65.8 33.2 20.8

59.8 27.6 16.2

Male (household head)

67.9

78.9

74.9

Female (household head)

74.9

81.6

77.2

National

0.59

0.50

0.49

Urban

0.62

0.48

0.48

Rural

0.47

0.44

0.43

Gender and poverty incidence

Inequality (Gini coefficient)

Data source: World Development Indicators (World Bank 2009).

Zambia witnessed a positive and stable annual GDP growth of 3.4% during 1999-02 following its renewed growth reforms. The new government indicated a return to pre-reform interventionism and agricultural subsidization, involving maize and fertilizer subsidies. The impacts of this market intervention are unclear. It is also unclear whether recent surge in growth was a result of structural adjustment, and whether the post-structural growth process will generate a broad-based poverty reduction (Dorosh et al., 2009; Van Rooyen and Sigwele, 1998).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

123

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3. AGRICULTURAL POLICY INTERVENTIONS Two policy biases commonly examined in the case of Zambia‘s structural adjustment program are urban bias and maize bias. First, copper mining created a strong urban bias in government food policies, social spending, and the protection of urban consumers (Copestake, 2002a). Zambia‘s reform policies and agricultural programs were pro-urban; rural areas suffered due to low infrastructure investment and spending. Agricultural policies were intervened to protect urban consumers and politically strong population. Secondly, the maize bias perpetuated a dependence on food subsidies within urban areas and fertilizer subsidies in rural areas; this distortion was exercised by agricultural policy interventions that favoured urban areas by supporting maize production in rural areas and subsidized urban food prices (Dorosh et al., 2009). Fertilizer subsidies might have benefited the farmers but the market intervention inflicted damage on the environment as small farmers resorted to slash and burn agriculture when subsidies were removed or maize production became less profitable than other cash crops (Culas, 1995). In general, the maize policy reforms entrenched urban bias and had mixed effects on poverty during various reform periods, as explained below. Agricultural policies did not promote diversification in agriculture sector. Urban bias that embodied economic reforms and food policies in Zambia since the 1980s shifted investments away from agriculture to mining and manufacturing sectors that mattered more to the urban population. Maize production and fertilizers were heavily subsidized to ensure low food prices for urban population under the political promise of maintaining food security. Prices of producer and consumer goods were determined centrally and implemented uniformly across the country. Maize production was promoted through further marketing support and public supply of fertilizer and other inputs. These policy distortions shifted the production away from areas of comparative advantage and concealed opportunities to diversify agriculture despite agro-climatic diversity of Zambia. Export potential of agriculture sector was undermined; farmers cultivated maize in areas that were not normally suited to growing this drought prone crop. The costs of subsidies amounted to 14% of total government budget and many farmers became mono croppers by 1991 (World Bank et al., 2005; World Bank et al., 2004). Poverty was entrenched and deeper among the households isolated from markets and with poor access to infrastructure, particularly those in more remote rural areas where road infrastructure was more deteriorated compared to less remote rural areas. Most households in these more remote and isolated areas are subsistence farmers and highly vulnerable to poverty. Yet, despite their isolation and basically due to maize bias in reform policy, more remote households produced and sold maize albeit to a lesser extent than less remote households. Urban bias and maize bias created a perpetual trap of low investments and high poverty in these areas (Jayne et al., 2006b), as explained below.

3.1. Maize Production The economic crisis in Zambia became acute in the 1980s. It was characterized by mounting external debt, deteriorating standard of living and stagnant productivity (Wood et

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

124

Richard J. Culas and Munir A. Hanjra

al., 1990). The crisis was the outcome of external shocks including the collapse of copper prices in 1975, and extensive but poorly managed government interventions in the economy including overvalued currency (the kwacha), trade protectionism, public ownership of major economic enterprises, and complete control over and interventionist policy in agricultural and food markets (World Bank et al., 2005). Zambia pursued an interventionist policy in maize markets both at the input and output levels. Maize and maize meal was subject to price control. Maize production was subsidized as well, through state provision of smallholder credit, fertilizer and seed. Interventions in maize market involved subsidies in both the input and output markets. For instance, in an attempt to provide cheap food to urban consumers in the 1980s the government of Zambia created monopoly institutions to enable it to intervene and control the market through the use of subsidies for maize, the main staple food crop in Zambia. The excessive promotion of maize was at the expense of other crops, achieved by providing subsidies for fertilisers and credit to produce maize (Copestake, 2002a), subsidised maize marketing and consumer price subsidies and also by disproportionate allocations of resources to maize research, extension, storage and processing (World Bank et al., 2005; World Bank et al., 2004). The government also enforced pan-territorial pricing (and equity pricing) for maize throughout the country. As a result, production of maize spread to areas with no comparative advantage. This led to adverse effects on food security in areas with low rainfall and contributed to soil acidification and degradation by the effect of continuous use of fertilisers without proper soil management practices. When production of maize moved away from the main consuming centres, the transport costs also increased and farmer‘s profitability was adversely affected. Maize production and pricing policies were not Pareto-Optimal nationally (Masters and Nuppenau, 1993) both in terms of total production and impacts on food security. Maize market liberalisation and liberalising maize input markets for credit and fertilizer can have diverse impacts on agricultural productivity. Reforming one set of policies could not help but had an effect on the other and it was not a lost lesson that both input and output markets should be simultaneously and equally liberalized. Infact, the market for maize and maize meal was more fully and more quickly liberalized than that for maize inputs, especially smallholder credit and fertilizer, sending wrong signals to farmers (Holden and Shanmugaratnam, 1995). The FAO (FAO, 2009) data on the production of maize and other staple crops during various reform periods show that the structural adjustment policies implemented in 1991 caused substantial changes in crop production and its composition. For instance, maize production fell sharply both in absolute terms and relative to other staple crops. Likewise panterritorial maize pricing policies were unsustainable. During the 1992 and 1995 droughts, maize producers were worst affected as maize is more susceptible to drought than other staple crops such as cassava and groundnut (Figure 2) (Winters, 2004). The impacts on poverty were diverse. Maize producers concentrated closer to urban areas and railway lines were most impacted as marketing and input support for maize production provided by the government was higher in these areas previously; more remote and isolated areas fared better despite the drought, including more cassava producers in Northern Province as they responded to agricultural liberalization by shifting production away from maize, and crop prices also responded to these shifts (Haggblade and Tembo, 2003). Market access is also likely to alter production choices through the availability of modern inputs such as fertilizers and high yielding seeds (Deininger and Olinto, 2000).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

125

180 160

Production index (tonnes), 1994=100

140 Cassava Groundnut Maize Millet Sorghum

120 100 80 60 40 20 0 1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Data source: FAO STAT (FAO, 2009).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 2. Production of maize and other staple crops in Zambia, 1994-2007.

The contraction in maize production meant insufficient food supply for the urban population. Zambia therefore had to import large quantities of maize. There was a switch from producing maize to other more profitable crops and livestock. Withdrawal of fertiliser and credit subsidies also resulted in an increase in the practice of the slash and burn farming system (chitemene) by poor farmers due to the lack of money for purchasing fertiliser. For instance, studies evidence that the slash and burn farming system persisted in Northern Province and this system was reportedly on the increase (Kapekele, 2006; Kakeya et al., 2006). The farmers are forced to expand area as productivity falls; it has been suggested that there is an inverse relationship between productivity and area expansion (Ehui and Pender, 2005). However, how much role does natural population growth play in this area expansion remains unclear due to data limitations. It is important to note that the majority of farmers are small-scale farmers in Zambia and they live in rural areas where their farming depends mainly on the environment or natural resources for their livelihood and survival. Farmers‘ ability to derive subsistence and income from productively and sustainably managed natural resources is part of a much larger question of alleviating rural poverty in Zambia, as discussed below.

3.2. Poverty Agriculture sector remains important in Zambia as it employs most of the rural households and provides food for more than half of the country‘s population. It is the best alternative to copper mining as a source of foreign exchange and its contribution to GDP. However, agricultural policies did not promote diversification in agriculture sector. Maize production and fertilizers were heavily subsidized to ensure low food prices for urban population. The agriculture sector was therefore undermined; farmers cultivated maize in

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

126

Richard J. Culas and Munir A. Hanjra

areas that were not normally suited to growing this drought prone crop. The costs of subsidies amounted to 14% of total government budget and many farmers became mono croppers by 1991 (McCulloch, et al., 2000). In Zambia about 85% of the farmer are small-scale farmers who cultivate between two to five hectares of land (Jayne et al., 2006b). The rest are the medium and large-scale farmers, cultivating more than five hectares of land, whose operations tend to be more mechanised and who make use of well-organized farmer networks (MAFF, 1992). The small scale farmers have low agricultural productivity and are trapped in poverty. For instance, a comparison of yield, inputs, labour, and returns of different crops for 1994 and 2002 shows that, gross returns per day of labour are less than $1 a day poverty line, typically for maize compared to cash crops (World Bank et al., 2005) despite some improvement in net revenue over time. Cotton and burley tobacco farmers are typically the one earning above $1 a day. Subsidized inputs clearly increase farmer incomes. Removing these subsidies may lead to reductions in maize production (reducing returns and worsening food security and poverty for smallholders) but rapid increases in cultivation of cotton, cassava and other secondary staples (by medium and large-scale farmers). Therefore, the analysis of the impact of these reforms on total farmer income, and on poverty, need to take account of the alternative cropping patterns and the diverse impacts on small and large farmers.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.3. Environmental Degradation In general there are five major farming systems being practised in Zambia. One of those systems is the slash and burn farming system that is traditionally practised. This system is also called chitemene shifting cultivation (Holden and Shanmugaratnam, 1995). This is a shifting cultivation method with a short cropping period of two to six years that is then followed by long fallow periods of ten to twenty years (Chidumayo, 1987). Maize, cassava, millet, groundnuts and beans are the dominant crops grown in this system. This type of farming system is however unsuitable in the long run because of the inadequacy of land to allow for long fallow periods. Although this system is regarded as a method of low input production technology, it is a major cause of deforestation in Zambia (Holden, 1993), apart from the poverty trap that has long persisted in the system. The slash and burn system (chitemene) is one of the dominant traditional land use systems practised in the Miombo woodlands of Northern Zambia (Holden, 1993), and data on the production of maize and other staple crops during various reform periods show that, the structural adjustment policies implemented in 1991 caused substantial changes in crop production and its composition. For instance, maize production fell sharply both in absolute terms and relative to other staple crops. Likewise pan-territorial maize pricing policies were unsustainable. During the 1992 and 1995 droughts, maize producers were worst affected as maize is more susceptible to drought than other staple crops such as cassava and groundnut (Figure 2) (Kakeya et al., 2006). The impacts on poverty were diverse. Maize producers concentrated closer to urban areas and railway lines were most impacted as marketing and input support for maize production provided by the government was higher in these areas previously; more remote and soil erosion and depletion of soil fertility due to the leaching of nutrients. This system is also a destructive system from an energy point of view as it loses large quantities of biomass due to burning. The slash and burning of trees contributes to soil

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

127

fertility in the form of ash, an alternative to the inorganic fertilizers, which the farmers would otherwise have to purchase. The ash is very efficient in terms of crop yield improvement and is more economical from small-scale farmers‘ point of view (Haggblade and Tembo, 2003). Although the land use system adopted by farmers depended on the interaction between biophysical and socioeconomic factors, the forestland area to come under the practice of slash and burn system has been on an increase, particularly after the government embarked on the structural adjustment program (Reed, 1996). The policy measures taken to implement the program, such as price deregulation, liberalization of agricultural marketing, and cuts in government expenditure through the removal of subsidies on fertilisers and credit, have all had their effect on the practice of the slash and burn system (Holden and Shanmugaratnam, 1995; Kakeya et al., 2006). These policy measures imposed serious economic hardships on small-scale farmers in particular, because they were resource poor and relied heavily on the maize subsidies and related policies. It has been argued that, in fact the farmers who had previously reduced their reliance on the practice of slush and burn system have now increased this practice due to the hardships created by the adjustment program (Kakeya et al., 2006). Lack of money and lack of access to loans to acquire necessary inputs have contributed to the farmers‘ decision to return to the slash and burn system since this system does not require purchased inorganic inputs (Holden et al., 1999; Kakeya et al., 2006).

4. CASE STUDY

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Using a unique data set from three villages, this case study examines the impact of policy interventions on maize productivity and profitability of smallholder households, and subsequently on their wellbeing. The case study evidence (Culas, 1995) is based on primary data collected from the densely populated Kasama District in Northern Zambia, which is considered to be a typical district in practising the slash and burn system (Figure 3).

Figure 3. Study area (Kasama district in Northern Province of Zambia).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

128

Richard J. Culas and Munir A. Hanjra

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Socioeconomic data from three villages in the Kasama district, namely, New Chambeshi, Old Chambeshi and Yunge were analyzed. Random sampling was used for the collection of data in each village. Data on socioeconomic factors were gathered in the respective periods at village and farm household levels. The data were collected at farm household levels for the cropping seasons 1986/87 and 1992/93, respectively. This dataset therefore facilitated for before and after comparisons of the impact of policy interventions with respect to the structural adjustment program implemented by late 1989 in Zambia. A two-period econometric model was estimated, using these data for the cropping season of 1986/87 – before intervention, and the cropping season of 1992/93 – after intervention. Farm household‘s decision making on agricultural production is influenced by many internal and external factors. Therefore a household‘s approach to decision making is a case of ‗optimizing behaviour‘ of peasant farmers. We examined the profit maximising behaviour of a sample of peasant farmers in Northern Province, following the hypothesis of Schultz (Schultz, 1961; 1972) that farm families in developing countries are efficient but poor in the allocation of resources in traditional agriculture (Ellis, 1998; 2000). For profit maximising goal, the economically efficient level of an input occurs when marginal value product (MVP) of the input equals its marginal factor cost (MFC); that is, when the marginal physical product of the input (MPP) equals the input-output price ratio. This model is shown in Figure 4 for our case study of maize and fertilizer.

Figure 4. Economic model showing impact of price changes on production.

This model shows the impact of price changes on optimum levels of input and output. It follows that changing the price ratio between input and output alters the economically optimum level. Further, a farmer may achieve efficiency in both an economic and Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

129

technological sense. The concept of economic efficiency here refers to the adjustment of inputs and outputs to reflect the relative prices for a given technology, whereas technical efficiency refers to the maximum attainable level of output for a given level of input by choosing the best alternative technologies available to the farmer (World Bank et al., 2005).

4.1. Impact of Market Liberalization We examine the impact of changes in fertilizer policy in three ways: first, we examine how increased fertilizer prices affect production and farm profits. Fertilizer price increases are likely to be more significant in the Northern Province because of its remoteness. We raise prices and examine the impacts in our model. Second, market liberalization might make fertilizer more readily available to farmers; therefore, we constrain the model not to allow adjustments (timely availability of fertilizer) and compare the relative impact on technological efficiency. Third, we use multiple regression models to determine the factors influencing fertiliser use in maize production, and to understand the impacts of policy changes on these factors and vis-à-vis smallholder‘s wellbeing.

4.4.1. Profitability Withdrawal of input subsidies for fertiliser, combined with price ceiling of maize (Masters and Nuppenau, 1993), reduced the producer margin (profit) in maize production (Table 3). This estimation was done for a quadratic production function, using the OLS method, for the before (1986) and the after (1992) intervention period, as noted earlier. Subsidized inputs clearly increased farmer incomes during the pre-reform period.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 3. Profitability in maize production (per hectare basis) in Kasama District, Zambia Before After 2 Y = -6 + 5.95 X - 0.00197 X (Y = Maize in kg/ha; X = Fertiliser in kg/ha) Y/X = 5.95 - 0.00394 X 1.5738 2.3516 1066.224 kwacha 1894.334 kwacha

Estimated production function (quadratic form)† Marginal physical product Fertiliser-maize price ratio Factor cost on fertiliser at profit maximisation Gross return on maize at profit 2548.728 kwacha 3336.216 kwacha maximisation Gross margin in terms of fertiliser 1482.504 kwacha 1441.88 kwacha use Reduction in profitability 40.62 kwacha † Parameters X and X2 are significantly different from zero at the probability levels of 1% and 10% respectively. R2 for model 0.518. df = 38. Prices were adjusted to constant term (1975 = 100).

Note: An equation of this kind is fairly common for describing the responses of a crop output to fertilizer use where crop yield is assumed to be driven mainly by the chemical fertilizers. Otherwise, the costs of inputs, other than the fertilizers, were treated (assumed) as

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

130

Richard J. Culas and Munir A. Hanjra

constant for both cropping seasons, i.e. before and after the adjustment policies. This assumption was made because the main impact of the adjustment policy was the removal of fertilizer subsidies hence an increase in fertilizer prices after the adjustment policy. Further, the contributions of land and labour in the crop yield were controlled, as well as any substitution possibilities of these inputs with the fertilizers. Removing these subsidies led to reductions in maize production2 but rapid increases in cultivation of cotton, cassava and other secondary staples. It was found that there was a reduction in profitability in terms of fertiliser use by about 41 Kwacha per hectare for the 1992 cropping season compared to that for the 1986 cropping season (prices adjusted to index of 1975 = 100). The reported reduction in profit is mainly due to an unfavourable price ratio (relative price) between fertiliser and maize that resulted from the adjustment program. A negative intercept term of the production function may be an indication of increased soil acidity, as a result of application of fertilisers in production but without proper soil/water management practices (Holden and Shanmugaratnam, 1995).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

4.4.2. Technical Efficiency The technical efficiency dimension in maize production was tested in a setting of production function with a dummy variable taking value of 1 for the cropping season 1986 and 0 for 1992 season. The dependent variable was maize production in kg and the independent variables were fertilisers in kg, work force in man hours and area of land cultivated in hectares. Different functional forms were estimated using the OLS method and based on the goodness of fit to data the Cobb-Douglas function was chosen (Table 4). Using the cross-section data, the estimation was carried out on a pooled dataset (pooling the two datasets together). Table 4. Technical efficiency dimension of maize production in Kasama District, Zambia Predictor Coef Stdev t-ratio p-value Constant 2.8321 0.4733 5.98 0.000*** In L (work force in man labour) -0.1693 0.1318 -1.28 0.205 In A (land area in ha) 0.1340 0.1354 0.99 0.327 In F (fertiliser in kg) 0.77481 0.07982 9.71 0.000*** Dummy (before = 1, -0.3126 0.1856 -1.68 0.098* after = 0) Dependent variable: In Y (Maize production in kg). R2 = 0.733. F-value = 37.10***. df = 58 ***Significant at 1% level. *Significant at 10% level. Work force = {Family labour x (Maize area cultivated/Total area cultivated)}.

2

It is implied that the effect of removing subsidies has been disastrous, especially on maize producers. However, there are at least two issues. First, it is important to consider the alternative use of this subsidy, i.e. if this subsidy is used in other sectors, like in infrastructure, education, health, etc. Second, removing subsidy improves government revenue. What is important is the net effect of subsidy removal, and this, of course, requires an economy-wide framework to capture this kind of indirect effects.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

131

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Off-farm employment and other business activities of the households have been neglected. Fertiliser amount represents an average of basal and top dressings that were applied in equal proportions. Note: The estimation of the production function was based on pooled data from households for both cropping sessions. Therefore the dummy variable taking value of 1 for the cropping season 1986 and 0 for 1992 season was specified. The estimated model shows that there was an upward shift in production for 1992 cropping season compared to that for the 1986 season, as shown by the coefficient of the dummy variable. However the value of the estimated coefficient was small and statistically significant only at 10% level of probability, which indicated that there was weaker or no clear evidence to hypothesize that the technical efficiency dimension of maize production had improved ―after‖ the adjustment program. This supported the argument that merely eliminating the price distortion would not increase maize production in Northern Province. While an upward shift in production has been observed, however, it was not clear whether this shift in production was due to a rise in the return to production inputs, an increase in factor endowments or both. It is possible to decompose this along the method suggested by Oaxaca (1973), for recent applications, see, e.g. Estudillo et al., (2006). Other factors, like provision of roads and infrastructure for transport and marketing and support services for research and development were also important in boosting production in the province (Holden et al., 1999; Kakeya et al., 2006).

4.4.3. Economic Efficiency The impact of the adjustment program on economic efficiency of maize inputs was estimated with a Cobb-Douglas production function using OLS method (Table 5a, 5b). The ratio of marginal value product of fertilisers to marginal factor cost of fertilisers is given in Table 5c. This ratio was statistically tested for its departure from one for both cropping seasons. The test evidenced that farmers were economically inefficient in using fertilisers for the 1986 cropping season but they made an efficient allocation of fertilisers during the 1992 season. This finding supported the hypothesis that elimination of price distortions – in particular, the removal of subsidies for fertilisers – led to an efficient allocation of fertilizer. Table 5a. Estimates of regression coefficients of inputs in Kasama District, Zambia Production function (maize) Before After

Constant (In 0)

Land area (1)

Fertiliser use (2)

Labour use (3)

R2

df

F-- value

SEv

1.5644** (0.6431) 3.7061*** (0.7015)

0.2797 (0.2966) 0.2226 (0.1641)

0.9887*** (0.1154) 0.6222*** (0.1237)

0.0027 (0.2721) -0.1845 (0.1512)

0.776

25

25.35***

0.6728

0.757

32

30.06***

0.5784

***Significant at 1% level. **Significant at 5% level. Standard errors of the estimated parameters are given in the parentheses.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

132

Richard J. Culas and Munir A. Hanjra Table 5b. Geometric means of variables and marginal products

Inputs

Before Mean 0.8508

MPP 1.0445

MVP 0.6372

After Mean 1.8084

MPP MVP labour use -79.429 -70.037 (man days) Fertiliser use 127.7148 2.5483 1.5545*** 214.9918 2.2531 1.988*** (kg) Land area 0.3359 274.0975 167.199 0.45168 383.6733 338.333 (ha) Output (kg) 1718 5241 Marginal Physical Products were estimated by  * Y / X where Y is the (geometric) mean of expected production, X is the geometric mean of input and  is the estimate of regression coefficient of respective input. Prices were adjusted to constant term (1975 = 100). ***Significantly different from zero at a probability level  99%. The standard error of marginal value products were calculated by the following formula: SE x = (Y /X )* S * Py. Where: Y is the geometric mean of expected production, X is the geometric mean of input, S is the standard error of the regression coefficient of input, and Py is the price of output.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 5c. Ratio of marginal value product to marginal factor cost of fertiliser a Input Before After Fertiliser 1.92912*** 0.95811ns a Student t-distribution was used to test the statistical significance of the ratio of MVP/ MFC equals one. *** Significantly different from one at a probability level ≥ 99%. ns Not significantly different from one even at a probability level ≥ 80%. Fertiliser price is an average of prices of both basal and top dressings, which were applied in, equal proportions.

The question of how efficiently farmers used fertilisers and other farm resources after the adjustment program was of generic interest. It is to be expected that farmers with better soils and management practices would, with continuing fertiliser inputs, be able to maintain their production levels over time, while other farmers may experience declining yields. It was predictable that poor farmers would move away from maize towards other crops and livestock and increase their practice of the slash and burn farming system because it does not require expensive fertilisers as inputs (Holden et al., 1998). Economic theory suggests that farmers will increase an input until the value of output produced equals the cost of input – that is, when the ratio of MVP/MFC = 1. However, empirical studies from other developing countries suggest that farmers apply fertilisers not just to the ratio of MVP/MFC = 1 but to a ratio of MVP/MFC that is greater than one or equal to two (Ellis, 1998). This implies that fertilizer use may be affected by other factors, as discussed below.

4.4.4. Socioeconomic Factors Influencing Fertiliser Use Since it was already found that the relative prices of maize and fertilisers had an effect on fertiliser inputs in maize production, testing the influence of other socio-economic factors on Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

133

the amount of fertilisers applied was important. Variables of interest were, work force (family labour in man hours), land area under the slash and burn system (hectares), previous year farm income (from maize), access to credit (dummy variable), and gender of the household head (dummy variable). A multiple regression model using the OLS method was estimated for 1987, the before intervention period and 1992, the after intervention period (Table 6a, 6b). Table 6a. Factors influencing fertiliser use before intervention in Kasama District, Zambia Predictor Coef Stdev Constant 14.01 61.27 Work force -6.336 7.627 Chitemene -0.003356 0.006527 Farm income, before 178.72 25.59 Credit (0,1, yes is 1) 173.96 28.19 Sex of household -15.86 29.08 (0,1, 1 is female) Dependent variable: Fertiliser use (kg). R2 = 0.707. df = 57. F- value for model = 25.12 *** ***Significant at 1% level.

t-ratio 0.23 -0.83 -0.51 6.98 6.17 -0.55

p-value 0.820 0.410 0.609 0.000*** 0.000*** 0.588

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 6b. Factors influencing fertiliser use after intervention in Kasama District, Zambia Predictor Coef Stdev Constant 349.0 121.6 Work force 1.07 17.68 Chitemene -0.00280 0.02022 Farm income, after 96.50 32.93 Credit (0,1, yes is 1) 316.73 57.94 Sex of household -191.75 61.12 (0,1, 1 is female) Dependent variable: Fertiliser use (kg). R2 = 0.675. df = 45. F- value for model = 16.63 *** ***Significant at 1% level.

t-ratio 2.87 0.06 -0.14 2.93 5.47 -3.14

p-value 0.007*** 0.952 0.891 0.006*** 0.000*** 0.003***

Model results show that, access to credit significantly influenced the fertiliser use for the both cropping seasons. Its influence was however higher for the 1992 cropping season than for the 1986 season. Previous year farm income from maize production had influence on the quantities of fertilisers used for both the seasons; however its influence was higher for the 1986 season than for the 1992 season. Gender of household head had influence only for the 1992/93 cropping season where, on average, female-headed households used 191.75 kg less fertiliser than male-headed households. Results indicate that access to credit was an important factor irrespective of the cropping seasons but its importance was higher after the adjustment program. This indicated the need for facilitating the private sector to complement the state role in providing credit to

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

134

Richard J. Culas and Munir A. Hanjra

smallholders (Langyintuo and Mungoma, 2008). It also implied that provision of subsidies for inputs should continue if the slash and burn system has to be reduced in the province (Holden and Shanmugaratnam, 1995). Previous year‘s farm income had an influence on the fertilisers used, however the effect was higher for the before than the after intervention period. Thus maize was a more profitable crop before the adjustment program. Furthermore, femaleheaded households have used lesser quantities of fertilisers than the male-headed households. This implies that the negative effect of the high costs of fertilisers, due to the removal of subsidies, impacted more on female-headed households than on the (labour rich) male-headed households (Geisler, 1992). Thus, the case study results show that after the intervention there was a fall in maize yield and production; the household level food security declined; and the fall in maize production encouraged the slash and burn agriculture (chitemene) or shifting cultivation in the study villages with consequences for the environment. Land area, access to credit, previous year farm income, and female-headed households were significant factors influencing fertilizer use in maize production such that future policy must leverage these factors to reduce poverty, as discussed below.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5. POLICIES FOR POVERTY REDUCTION As about two-third of the Zambian poor live in rural areas, agriculture will remain important to the food security of rural and urban poor as well (World Bank, 2008). Agricultural-led growth offers a good alternative to poverty reduction in Zambia but it had to be more pro-poor. Findings from the CGE model of Zambia (World Bank et al., 2004) show that the declines in poverty under copper-led growth path, or non-agricultural led growth path are substantially lower than under the agricultural-led growth scenario but the goal of halving poverty may not be reached until 2040, under the current growth path. A more pro-poor agricultural growth offers the route to reduce poverty to contribute to the achievement of hunger and poverty related MDG by 2015 and beyond. To be more pro-poor, the agriculturalled growth must realize synergies from a range of policies including: the staple-led growth; the cash-crop led growth; improved access to the markets; gender inclusion; regional food trade; and smarter investments for poverty reduction as explained below.

5.1. Staple Crops Staple crops are grown through out the country and can directly influence food security and poverty. The distributional impacts of staple crops may not necessarily be more favourable than cash-crop led growth. Increased production may be more evenly distributed, but the expansion in staples alone may lead to an increase in poverty (World Bank et al., 2004), because rapid rise in staple production may create market glut, leading to declines in prices. While lower food prices always benefit urban poor and rural non-farm households who are always net food buyers, they may have negative impacts on smallholders. Increased staple production may improve food security in the short run but may not result in sustainable poverty reduction in the long run due to market constraints (Diao et al., 2003). Inadequate

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

135

capital, farm credit, inputs, and labor shortages during sowing season are the main constraint to staple-led growth, which must be addressed through higher state expenditure on agriculture and extension services. Sustained public investments in agriculture, through agricultural sector liberalization and diversification, and private investments in farm capital, through microcredit, remain critical to longer term staple-led growth (Haggblade, 2007; Jayne et al., 2006a).

5.2. Cash-Crops The cash-crop led growth would achieve lower reduction in poverty than broad-based agricultural growth because of low consumption share of such crops by the poor, higher benefits to the cash crop producers (minority), lack of capital available to smallholders to engage in cash crop roduction, and spending of the cash-crop revenue on higher imports. Improved access to markets is likely to increase the benefits from cash-crop led growth but smallholders are unlikely to participate into and benefit from this activity in a major way (World Bank et al., 2004). Lack of participation by majority of the producers who constitute the bulk of the poor would mean lower reduction in poverty, although they might benefit indirectly from improved access to infrastructure.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.3. Market Access Agriculture‘s potential to generate a more pro-poor growth process depends on the creation of new market opportunities for smallholders and rural households. Market access must consider various agents and their interlinkages such as smallholder farmers, rural and urban consumers, processor, distributors, whole sellers, and rural-urban market linkages as well as linkages with international markets and macroeconomic policies. Despite that the trade liberalization has opened new markets for agriculture, implementing appropriate policies and institutional infrastructure has proven equally difficult in Zambia. The analysis of past interventionist policies and their failures suggests that state should limit interventions in markets, especially in ways that directly distort input and output prices and protect specific crops or consumer groups. The state should rather encourage private sector activity and investments, and must focus on addressing infrastructure constraints to help improve market access and accelerate more pro-poor growth in Zambia through renewed investments in agricultural research, education and extension. Increased government and donor support for public good investments to derive down the cost of production and marketing as well as institutional arrangements will be critical for poverty reduction among smallholders in Zambia (Jayne et al., 2006a).

5.4. Infrastructure Investments in rural infrastructure can reduce poverty (Hanjra et al., 2009a; Hanjra et al., 2009b; Narayanamoorthy and Hanjra, 2006). Rural infrastructure has suffered from market interventionism through macroeconomic stabilization policies in Zambia. For instance, under

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

136

Richard J. Culas and Munir A. Hanjra

the structural adjustment a ―cash budget‖ system was adopted, which limited expenditures to available revenues. Furthermore, available funds were diverted towards general public services with higher public sector outlay but away from the vital economic services such as rural infrastructure, thus social services and rural infrastructure suffering as a result (Diao et al., 2003). For example, just 18% of the rural households lived within five km of input markets in 1998 and 30% of the paved roads were in need of repair. Thus missing and deteriorating infrastructure in rural and particularly remote areas remains a key constraint to more pro-poor agricultural growth, as it undermines access to urban and regional markets. Beyond addressing issues with existing infrastructure, the road network must be extended to remote rural areas (Haggblade, 2007; Jayne et al., 2006a). Urban bias and the paved roads connecting just urban areas have left rural infrastructure gaps, resulting in the isolation of many rural areas and have reinforced their dependence on subsistence crop production and denied opportunities for engaging in market oriented agriculture.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.5. Gender Empowerment Pro-poor spending must (World Bank et al., 2004) also address the gender differential in access to markets and education, as men and women face quite different constraints to participation into a more pro-poor growth process. Zambia‘s rank in Gender Development Index has remained low at 167, due to poor indicators for male-female school enrolment ratios, literacy rates, education achievements, and earned incomes (UNDP, 2006). The gender gap is a significant issue, since women constitute about 50% of the total labour force (World Bank, 2008), and the share of women employed in low-productivity agriculture, including slash and burn system discussed in our case study, is much higher than that of men, especially for food crop production. Women also face considerably high barriers in access to farm credit and community-led financing schemes (Fonta and Ichoku, 2005). Addressing the gender gap is therefore a key pathway to food security as well as environmental sustainability, for instance, through reduction in the slash and burn system. Urban population may double in the next 15 years (UNDP, 2006), and urbanization will lead to growing demand for purchased and prepared foods in Zambia. Rural specialization will culminate in growing rural food markets. Despite diversification in agricultural production, staple crops like maize will remain important to the poor. One study modelled the price impact of both drought and bumper maize harvest under both closed border and free trade options in Zambia, using 15 years of historical data for five household groups in two geographical zones. Results show that, trade restrictions increase maize price volatility, and raise transaction costs due to lower farm prices and higher consumer prices, and thus diminish farm prices and producer incentives (Table 7) (Govereh, 2007; Haggblade et al., 2008). Inter-zone trade liberalization that links surplus with deficit zones can help reduce price volatility, improve farm prices and producer incentives, lowers consumer prices, and improves calorie consumption of poor households (Govereh, 2007). Thus expanded regional trade in food staples, including maize, is necessary to accelerate agricultural income growth and reduce poverty in Zambia.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

137

Table 7. Impact of trade policies on maize prices and household consumption in Zambia Trade policy Closed border Maize prices (% change from normal) Bumper harvest (30% above normal) -50% Drought (30% below normal) 163% Calorie consumption of poor households North -2% South -19% Production Cassava production 24% Maize area, next season 34% Data source: Haggblade et al. (2008); Govereh (2007).

Open border -26% 36% -3% -9% 6% 10%

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.6. Subsidies Public policies must rethink the role of agricultural input subsidies, and must reconsider the current fertilizer and maize prices, uncertainty regarding future food prices, impacts on subsidy programs, and the role of subsidy programs on food security under different price regimes and the emerging contexts in the future (Dorward, 2009). There is a need for smarter subsidies (Dorward, 2009) that focus on design and implementation issues and improve program effectiveness and efficiency through improved targeting to the smallholders and poor areas (Ravallion and Wodon, 1999). Agricultural policies must also support rural income diversification. Given low yield and single season cropping under rainfed agriculture, smallholder crops can only be expected to make a minor contribution to the reduction in rural poverty, despite contributing to food security. Data on smallholder crops show that net returns per labor day are $0.91 for local maize with hand hoe production technologies and $1.36 for groundnut under low management systems (World Bank et al., 2005). These returns are far below the internationally accepted minimum of $1 a day per person, to keep out of poverty throughout the year due to a single cropping season. Even high yield cash crops such as burley tobacco and cotton do not provide enough returns to reduce poverty. Most smallholder crops such as maize, groundnut and cotton have low input costs, but also relatively low returns to labor. Crop diversification into high valued crops can be a pathway out of poverty for smallholders. Yet, higher valued crops such as burley tobacco and paprika have higher cash inputs and labour demand, which smallholders cannot afford. Entry into high valued crops also requires substantial investments in new technology, inputs, extension and access to markets. The estimates of investments costs needed to enter high valued, commercial agricultural production (Keyser, 2002). High initial investments costs, technical skills required, risk involved and the need to finance indivisible investments in tractors and farm machinery or to spread investments over large land areas not available to smallholders are significant barriers to entry into high return agriculture.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

138

Richard J. Culas and Munir A. Hanjra

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.7. Micro Credit Agricultural credit supply at subsidized interest rates must be one of the primary policy actions to reduce the entry barrier and for improving the productivity and incomes of smallholder farmers. The programs for such policies are based on the belief that the main barrier preventing the transformation of traditional agricultural technologies to modern and productive technologies is the inability of farmers to purchase the necessary inputs such as chemical fertilizers owing to a lack of credit facilities. If such subsidized credit policies could facilitate the farmers to purchase the modernized production inputs, such as fertilizers, the productivity of lands, and hence income, of smallholder farmers will improve (Orr, 2000; Taylor et al., 1986). Evidence also suggests that the probability of farmers using agricultural credit increased with more secure land tenure, more household wealth (for example, number of durable goods), higher liquidity and higher levels of household education (Graham and Mark, 2001). In summary, agricultural policy reforms should also address these high entry costs and associated input and output pricing issues. Production subsidies must be complemented with incentives for conservation farming that gained popularity in the 1990s in response to grow. Urban population may double in the next 15 years (UNDP, 2006), and urbanization will lead to growing demand for purchased and prepared foods in Zambia. Rural specialization will culminate in growing rural food markets. Despite diversification in agricultural production, staple crops like maize will remain important to the poor. One study modelled the price impact of both drought and bumper maize harvest under both closed border and free trade options in Zambia, using 15 years of historical data for five household groups in two geographical zones. Results show that, trade restrictions increase maize price volatility, and evenly spread labour over the year. Dry season land preparation after first rain, low or minimum tillage, crop residue retention instead of burning, better seed and fertilizer use, nitrogen fixing crops rotations instead of continuous production of crops such as maize and cotton, together can contribute to sustainable land use practices for reducing the environmentally deleterious slash and burn system. Agricultural policies must target these practices specifically to small scale farmers, instead of emerging and commercial farmers only as in the past.

SUMMARY This paper examines the impact of agricultural policy reforms on food security and poverty in Zambia for the period 1964-2008. The empirical work draws on secondary sources and an evaluation of farm household data from three villages in Kasama District from 1986/87 and 1992/93 (before and after intervention period, respectively) to estimate a twoperiod econometric model. The study addresses, in a comprehensive manner, the impact of policy reforms undertaken within the framework of the structural adjustment program on the Zambian agriculture in general and on the maize crop in particular. In view of the bigger picture of continued food security and poverty issues in the country, this study attempts to get the facts straight which will be helpful for both the Zambian government and donors alike. The paper concludes that Zambia‘s agricultural policy reforms have induced a diversification

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Some Explorations into Zambia‘s Post-Independent Policies for Food…

139

out of maize by reducing the profitability of maize production and of fertilizer use. The analysis of policy impact in this paper uses the before and after intervention analysis. Both the Kasama district data and its econometric model and the tracking of aggregate national poverty incidence under various structural adjustment regimes look at conditions before and after and with without the policy intervention, respectively. The paper identifies a range of factors that might have changed and links the analysis directly to the specific policy changes implemented by the Zambian government. Subsidized inputs clearly increased farmer incomes during the pre-reform period. Removing these subsidies led to reductions in maize production but rapid increases in cultivation of cotton, cassava and other secondary staples. An analysis of the impact of these reforms on total farmer income, and on poverty, would need to take account of these alternative cropping patterns in the future work.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

REFERENCES Blackwood, D.L., Lynch, R.G., 1994. The measurement of poverty and inequality: a policy maker's guide to literature. World Development 22 (4), 567-578. Chen, S., Ravallion, M., 2007. Absolute poverty measures for the developing world, 1981– 2004. PNAS 104 16757-16762. Chidumayo, E.N., 1987. A shifting cultivation land use system under population pressure in Zambia. Agroforestry Systems 5 15-25. Copestake, J., 2002a. Inequality and the polarizing impact of microcredit: evidence from Zambia's copperbelt. Journal of International Development 14 (6), 743-755. Copestake, J., Weston, P., 2000. Pitfalls of debt reduction: a counterfactual case study of Zambia during the early 1990s. Journal of International Development 12 (4), 585-600. Copestake, J.G., 2002b. Inequality and the polarizing impact of microcredit: evidence from Zambia's copperbelt. Journal of International Development 14 (6), 743 - 755. Culas, R.J. (1995). A Case Study on Impact of Structural Adjustment Program on Maize Production in Northern Province of Zambia. MSc Thesis, Agricultural University of Norway (Norwegian University of Life Sciences). Deininger, K., Olinto, P., 2000. Why Liberalization Alone Has Not Improved Agricultural Productivity in Zambia: The Role of Asset Ownership and Working Capital Constraints. The World Bank, Washington, D.C. Diao, X., Fan, S., Zhang, X., 2003. China's WTO accession: impacts on regional agricultural income— a multi-region, general equilibrium analysis. Journal of Comparative Economics 31 (2), 332-351. Dorosh, P.A., Dradri, S., Haggblade, S., 2009. Regional trade, government policy and food security: Recent evidence from Zambia. Food Policy In Press, Corrected Proof doi: DOI: 10.1016/j.foodpol.2009.1002.1001. Dorward, A., 2009. Rethinking agricultural input subsidy programmes in a changing world. Paper prepared for the Trade and Markets Division, Food and Agriculture Organization of the United Nations, Rome, Italy. Easterly, W., 2009. How the Millennium Development Goals are unfair to Africa. World Development 37 (1), 26-35.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

140

Richard J. Culas and Munir A. Hanjra

Ehui, S., Pender, J., 2005. Resource degradation, low agricultural productivity, and poverty in sub-Saharan Africa: pathways out of the spiral. Agricultural Economics 32 (s1), 225-242. Ellis, F., 1998. Household strategies and rural livelihood diversification. The Journal of Development Studies 35 (1), 1-38. Ellis, F., 2000. The determinants of rural livelihood diversification in developing countries. Journal of Agricultural Economics 51 (2), 289-302. Estudillo, J.P., Sawada, Y., Otsuka, K., 2006. The Green Revolution, development of labor markets, and poverty reduction in the rural Philippines, 1985-2004. Agricultural Economics 35 (s3), 399-407. FAO, 2009. FAO STAT. Online database, accessed May 2009, Rome, Italy. Fonta, W.M., Ichoku, H.E., 2005. The Application of Contingent Valuation Method to Community-Led Financing Schemes: Evidence from Rural Cameroon. The Journal of Developing Areas 39 (1), 18. Fukuda-Parr, S., 2004. The Millennium Development Goals: the pledge of world leaders to end poverty will not be met with business as usual. Journal of International Development 16 (7), 925-932. Geisler, G., 1992. Who is losing out? Structural adjustment, gender, and the agricultural sector in Zambia. The Journal of Modem African Studies 30 113-139. Gibson, N.C., 2004. Africa and globalization: marginalization and resistence. Journal of Asian and African Studies 39 (1-2), 1-28. Gleick, P.H., 2003. Water use. Annual Review of Environment and Resources 28 (1), 275314. Govereh, J., 2007. Regional Trade in Food Staples: Using Trade Policy to Improve Farmer Incentives and Food Security. Conference on Strengthen and Widening markets and Overcoming Supply Side Constraints for African Agriculture, Michigan State University, USA. Graham, W.A., Mark, A.G.D., 2001. Relationship between the Mode of Land Distribution, Tenure Security and Agricultural Credit Use in Kwazulu-Natal. Development Southern Africa 18 (3), 295-308. Haggblade, S., 2007. Returns to investment in agriculture: Policy Synthesis. http://www.aec.msu.edu/fs2/zambia/ps19.pdf, Food Security Research Project-Zambia (19), Lusaka. Haggblade, S., Jayne, T., Tschirley, D., Longabaugh, S., Weber, M.T., 2008. Potential for Intra-Regional Maize Trade in Southern Africa: An Analysis For Zambia at the SubNational Level. Michigan State University – Food Security Group, SADC Southern Africa Regional Conference on Agriculture Gaborone, Botswana, December 8-9, 2008, USA. Haggblade, S., Tembo, G., 2003. Conservation Farming in Zambia. Environment and Production Technology Division Working Paper No.108, International Food Policy Research Institute, Washington, D.C. Hanjra, M.A., Ferede, T., Gutta, D.G., 2009a. Pathways to breaking the poverty trap in Ethiopia: Investments in agricultural water, education, and markets. Agricultural Water Management 96 (11), 1596-1604. Hanjra, M.A., Ferede, T., Gutta, D.G., 2009b. Reducing poverty in sub-Saharan Africa through investments in water and other priorities. Agricultural Water Management 96 (7), 1062-1070.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Some Explorations into Zambia‘s Post-Independent Policies for Food…

141

Hill, C., McPherson, M.F., 2004. Promoting and Sustaining Economic Reform in Zambia. Harvard University Press, USA. Holden, S.T., 1993. Peasant household modelling: Farming systems evolution and sustainability in northern Zambia. Agricultural Economics 9 (3), 241-267. Holden, S.T., Shanmugaratnam, N., 1995. Structural adjustment, production subsidies and sustainable land use. Forum for Development Studies 2 247-266. Holden, S.T., Shiferaw, B., Wik, M., 1998. Poverty, market imperfections and time preferences: of relevance for environmental policy? Environment and Development Economics 3 (1), 105. Holden, S.T., Taylor, J.E., Hampton, S., 1999. Structural adjustment and market imperfections: a stylized village economy-wide model with non-separable farm households. Environment and Development Economics 4 (1), 69. Jayne, T.S., Mather, D., Mghenyi, E., 2006a. Smallholder Farming Under Increasingly Difficult Circumstances: Policy and Public Investment Priorities for Africa. http://www.aec.msu.edu/fs2/papers/idwp86.pdf, (CDIE reference PN-ADG-862), USA. Jayne, T.S., Zulu, B., Nijhoff, J.J., 2006b. Stabilizing food markets in eastern and southern Africa. Food Policy (Managing Food Price Risks and Instability in a Liberalizing Market Environment) 31 (4), 328-341. Kakeya, M., Sugiyama, Y., Oyama, S., 2006. The Citemene system, social leveling mechanism, and agrarian changes in the Bemba villages of northern Zambia: An overview of 23 years of "fixed-point" research. African Study Monographs 27 27- 38. Kapekele, E.M., 2006. Determinants of slash and burn: The case of Chitemene farming system in Zambia. MSc Thesis, University of Pretoria. Keyser, J.C., 2002. Zambia Financial Crop Models: Comparison of 1994-5 and 2001-2 Seasons and Zimbabwe 2000-02 Seasons. Report prepared for The World Bank, Washington, D.C. Kurukulasuriya, P., Mendelsohn, R., Hassan, R., Benhin, J., Diop, M., Eid, H.M., Fosu, K.Y., Gbetibouo, G., Jain, S., Mahamadou, A., El-Marsafawy, S., Ouda, S., Ouedraogo, M., Sène, I., Seo, N., Maddison, D., Dinar, A., 2006. Will African agriculture survive climate change? World Bank Economic Review 20 (3), 367-388. Kydd, J., 1998. Cofee after copper? Structural adjustment, liberalisation, and agriculture in Zambia. Journal of Modern African Studies 26 (2), 227-251. Langyintuo, A.S., Mungoma, C., 2008. The effect of household wealth on the adoption of improved maize varieties in Zambia. Food Policy MAFF, 1992. Ministry of Agriculture, Food and Fisheries. 1992: A framework for agricultural policies to the year 2000 and beyond. December 1992. Lusaka. Masters, W.A., Nuppenau, E.-A., 1993. Panterritorial versus regional pricing for maize in Zimbabwe. World Development 21 (10), 1647-1658. Matangi, C.N., 2006. Skills under threat: the case of HIV/AIDS in the mining industry in Zimbabwe. Journal of International Development 18 (5), 599-628. McCulloch, N., Baulch, B., Cherel-Robson, M., 2000. Poverty, Inequality and Growth in Zambia during the 1990s. Working Paper, Institute for Development Studies, University of Sussex, UK. Narayanamoorthy, A., Hanjra, M.A., 2006. Rural infrastructure and agricultural output linkages: a study of 256 Indian districts. Indian Journal of Agicultural Economics 61 (3), 444-459.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

142

Richard J. Culas and Munir A. Hanjra

Orr, A., 2000. Green Gold?: Burley tobacco, smallholder agriculture, and poverty alleviation in Malawi. World Development 28 (2), 347-363. Pereira, L.C.B., 1993. Economic reforms and cycles of state intervention. World Development 21 (8), 1337-1353. Ravallion, M., Wodon, Q., 1999. Poor Areas, or Only Poor People? Journal of Regional Science 39 (4), 689-711. Reed, D (ed.) 1996. Structural adjustment, the environment and sustainable development. Earthscan Publications Ltd, London. Sandbrook, R., 1996. Democratization and the implementation of economic reform in Africa. Journal of International Development 8 (1), 1-20. Schultz, T., 1961. Investment in Human Capital. American Economic Review 51 (1). Schultz, T.W., 1972. Knowledge, Agriculture and Welfare. Science Studies 2 (4), 361-368. Taylor, T.G., Evan, D.H., Aloisio, T.G., 1986. Agricultural Credit Programs and Production Efficiency: An Analysis of Traditional Farming in Southern Minas Gerais, Brazil. American Journal of Agricultural Economics 68 (1), 110-119. UNDP, 2006. Human Development Report 2006 -- Beyond Scarcity: Power, Poverty and the Global Water Crisis. United Nations Development Programme, New York. UNDP, 2010. Human Development Report 2009. Online Database, Zambia HDI Rank, United Nations Development Programme, New York. van Rooyen, J., Sigwele, H., 1998. Towards regional food security in southern Africa: a (new) policy framework for the agricultural sector. Food Policy 23 (6), 491-504. Winters, L.A., 2004. Trade Liberalisation and Economic Performance: An Overview. The Economic Journal 114 (493), F4-F21. Wood, A., Kean, S., Milimo, J., Warren, D., 1990. The Dynamics of Agricultural Policy and Reform in Zambia. Iowa State University Press, 728 pp, USA. World Bank, 2008. World Development Report 2008: Agriculture for Development. The World Bank, Washington, DC. World Bank, 2009. World Development Indicators. Online database, the World Bank, Washington, DC. World Bank, Siegel, P.B., Alwang, J., 2005. Poverty reducing potential of smallholder agriculture in Zambia. The World Bank, Washington, DC. World Bank, Thurlow, J., Wobst, P., 2004. Operationalising pro-poor growth - Zambia. DFID, UK. WTO, 2002. Trade Policy Review, Zambia. Report by the Government of Zambia, Trade Policy Review Body, World Trade Oranization.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 143-169

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 5

„GHER‟ FARMING SYSTEM OF BANGLADESH: A WIN-WIN STRATEGY FOR AGRICULTURAL DEVELOPMENT? Basanta K. Barmon1 and Sanzidur Rahman2 1

Department of Economics, East West University, Dhaka, Bangladesh 2 School of Geography, Earth and Environmental Sciences, University of Plymouth, UK

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ABSTRACT The present chapter provides a detailed examination of the present status of ‗gher‘ farming system, i.e., an integrated prawn-fish-rice joint culture, which is practiced widely in southwest region of Bangladesh. It is an efficient and diversified farming system that produces a staple food crop (rice and fish) in conjunction with a high value cash crop (prawn) and provides a range of social, economic and environmental benefits. Gher farming is already playing an important role in Bangladesh economy by earning valuable foreign exchange, increasing food production and providing employment opportunities. The system is potentially a win-win agricultural development strategy that positively contributes towards food security as well as promotes livelihoods of farmers associated with this farming system. However, to date, the diffusion of this system remains marginal in other parts of the country. This is because, a number of challenges, including weather (flood, drought and cyclone), prawn diseases, constraints related to prawn marketing, and social conflicts are inhibiting its expansion to other regions of the economy. In light of this comparative analysis of present status, we judge the future prospect of this farming system that can serve as a desirable strategy for agricultural growth and development in Bangladesh.

Keywords: Prawn, fish, rice, integrated farming, food security, livelihoods promotion, Bangladesh. 

Phone: +44-1752-585911, Fax: +44-1752-585998, E-mail: [email protected].

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

144

Basanta K. Barmon and Sanzidur Rahman

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1. INTRODUCTION The economy of Bangladesh is largely dependent on crop agriculture although aquaculture is gaining importance in recent years. Bangladesh is considered as one of the most suitable countries in the world for freshwater prawn (Macrobrachium rosenbergii) farming, because of its favourable resources and agro-climatic conditions. A sub-tropical climate and a vast area of shallow water bodies provide a unique opportunity for freshwater prawn production (Ahmed et al., 2008a). Within the overall agro-based economy in Bangladesh, M. rosenbergii farming is currently one of the most important sectors. During the last three decades, its development has attracted considerable attention due to its export potential. The freshwater prawn is a highly valued product for international markets; almost all prawns are therefore exported particularly to the USA, Europe and Japan (Ahmed et al., 2009; Islam, 2008). In 2007-08, Bangladesh exported 49,317 tons of prawn and shrimp1 valued at US$415 million, of which 25% was contributed by prawn (DOF, 2009). Prawn marketing potentially provides economic returns and social benefits to thousands of rural poor. The total area under prawn cultivation, in particular, in Bangladesh is estimated to be around 60,000 ha (Khondaker, 2009). Most prawn farms (71%) are located in southwest Bangladesh, mainly Bagerhat, Khulna and Satkhira districts, with the remainder in the southeast region (Ahmed et al., 2008a). The practice of small-scale prawn farming in rice fields is widespread in southwest Bangladesh due to the availability of wild postlarvae and low-lying rice fields, a warm climate, fertile soil, and cheap and abundant labour. The most spectacular development of prawn farming has taken place in Bagerhat district, where thousands of farmers have converted their rice fields to prawn farms to accommodate profitable prawn culture. The innovation of prawn farming in rice fields, combined with high prices of prawn in the international market, and rice for household consumption, has led increasing numbers of farmers to convert their rice fields to prawn farms (Ahmed et al., 2010). Even though this farming system is on the rise largely in coastal areas, there is limited information on its relative profitability and associated impacts. Given this backdrop, the present chapter provides a detailed analysis of this farming system in comparison to the most commonly practiced farming system in Bangladesh, i.e., the year round modern varieties (YRMV) of rice farming system, also known as the ‗Green Revolution‘ technology. The chapter proceeds as follows. The next section briefly describes the RPG farming system and the YRMV rice farming system. Section 3 presents the research methods including description of the study areas and the data. Section 4 presents the results. Section 5 provides an overview of the constraints and opportunities of expanding the RPG farming system. The final section concludes and draws policy implications.

1

The term ‗shrimp‘ is used for species in the family penaeidae.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

145

2. „GHER‟ AND „MODERN RICE‟ FARMING SYSTEM IN BANGLADESH 2.1. The „Rice-Prawn Gher (RPG)‟ Farming System

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The term ‗gher‘ refers to the modification of a rice field to enable operation of three enterprises: prawn (principal enterprise), carp, and MV rice. The middle of the ‗gher‘ is surrounded by high and wide dikes with canals dug at the inner periphery of the dikes. The whole area of ‗gher‘ is filled with rain-water during monsoon season, specifically from June to December, and closely resembles a typical pond. The ‗gher‘ becomes dry naturally from January to April except the canals.

Source: Adapted from Barmon, et al., 2008. Figure 1. Diagram of RPG system in rainy and winter season and irrigation system and soil fertility process for MV paddy production.

A typical ‗gher‘ cycle begins in May when farmers release freshwater prawn (M. rosenbergii) postlarvae into the ‗gher‘. Farmers use lime during ‗gher‘ preparation to reduce soil acidity. During the growing period, farmers provide supplementary feed to the prawn. Traditionally, only snail meat was used as prawn feed, but nowadays farmers use a wide range of homemade and commercially available supplementary feeds to increase production. Before releasing prawn postlarvae (PL), farmers repair the ‗gher‘ dikes and trenches almost annually. The carp fingerlings were also released into the ‗gher‘ during May-June and are cultured for nine months or so (as long as sufficient water is retained in the ‗gher‘). Usually,

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

146

Basanta K. Barmon and Sanzidur Rahman

no specific supplementary feed is provided for the carps. Carps share the feed supplied to the prawns. Between January to April, farmers grow MV Boro rice on the land inside the ‗gher‘, which is irrigated by water from the inside canals using either traditional methods (swing basket) and/or pumps.

2.2. The „Year-Round Modern Variety (YRMV)‟ Farming System Currently three types of rice are produced in Bangladesh in three distinct seasons: aus (April to August), transplanted aman (T. aman) (August to December), and boro (January to April). Among them, aus and T. aman rice are produced under rainfed conditions and MV boro rice is produced in irrigated water (ground water or rivers and canals). Modern varieties of rice were introduced in Bangladesh for the boro and aus season in 1967 and aman season in 1970 (Hossain et al, 1990). In 2002, only 32% area was irrigated under MV rice production in Bangladesh, (BBS, 2002). Irrigation and chemical fertilizers are not generally used in local aus and T. aman rice production because the rice fields go under water. Farmers transplant MV boro rice from mid-January to mid-February, and harvest from mid-April to mid-May. Farmers usually use chemical fertilizers, pesticides, and irrigation for boro rice production. Along with rice crops, farmers also cultivate oil seeds, potato, and vegetables in the comparatively high land during the winter season.

3. METHODOLOGY

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.1. The Study Areas The present research was conducted in Bilpabla, which is located about 7 km west from headquarter of Khulna district, and about 310 km south from the capital Dhaka. Bilpabla village was selected purposively because it is one of the typical villages in RPG farming. The demographic characteristics of the villages are very similar to other villages where RPG farming is practiced. Also, two year-round modern varieties (YRMV) of rice farming villages were purposively selected. These are Lebubunia and Chanchra village. Lebubunia village was selected purposely because the cropping pattern of Lebubunia was similar to Bilpabla village prior to the RPG farming system. Moreover, Lebubunia is the neighbor of Bilpabla village. The altitude level of rice fields in Lebubunia is slightly higher than the land for RPG farming in Bilpabla village. As a result, the farmers in Lebubunia village cannot convert their rice field into gher farms. The farmers in Lebubunia village mainly grow YRMV rice twice a year. The location of RPG farming (Bilpabla village) and YRMV rice farming (Lebubunia village) is exhibited in Figure 2. Twenty farmers were randomly selected from Lebubunia who mainly practice YRMV rice farming throughout the year. Chanchra village is located in neighboring Jessore district which is about 60 km from Khulna district. The farmers mainly produce YRMV rice twice a year. One hundred farmers were randomly selected. Information collected include general information of the households,

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

147

main inputs used such as chemical fertilizers, irrigation, pesticides, plowing, laborer, etc and outputs of MV rice produced throughout the year.

Source: Adapted from Brmon, 2006.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Figure 2. RPG (Bilpabla village) and YRMV paddy farming (Lebubunia village) in Khulna district.

The climate of the study area is of tropical monsoon-type with wide seasonal variations in rainfall, moderately warm temperatures, and high humidity. The rainy season formally starts from June to October when the monsoon air stream sweeps in from the Bay of Bengal. During this time, Bangladesh receives heavy rainfall and most places receive more than 2,538 mm with a wide range 1,937 to 2,949 mm of rain in 2001 (BBS, 2002). Khulna district annually receives, on an average, 1,696 mm with wide range between 1,159 to 1,994 mm. The average monthly humidity was 77%, which varies between 61% (March) and 84% (August) in 2001. However, the average monthly humidity was 79% with range between 66% (March) and 87% (July). The mean temperature was 270C in 2005 (BBS, 2002). RPG farming system, YRMV boro and local aman rice are the well adopted agricultural farming systems in Bilpabla, Lebubunia and Chanchra village. However, RPG farming is newer as compared to YRMV boro and local aman rice production. Before the RPG farming had started, the farmers in Bilpabla village produced only local aus and aman rice. On the other hand, the farmers in Lebubunia and Chanchra villages are now cultivating MV boro and aman instead of the traditional local aus and aman rice.

3.2. The Farm Surveys Several field surveys were conducted between 2006 and 2007. Farm survey methods, and data collection periods and procedures are presented in Table 1. The first survey was conducted from November to December in 2006. First, a census was conducted in Bilpabla village to collect the general descriptions of RPG farm households. Second, 90 RPG farmers were randomly selected from Bilpabla village and the basic information concerning main

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

148

Basanta K. Barmon and Sanzidur Rahman

inputs and outputs of MV rice and prawn production as well as household income and labor demand was collected. To compare the main inputs and outputs of MV rice production, household income and labor demand of RPG farmers, 100 YRMV rice farmers were also randomly selected from Chanchra village. Table 1. Duration of farm survey and soil test experimental time of the present research study Particulars

Farm survey and soil samples collection time

1. Soil samples collection: First collection: December, 2005 (at the beginning of rice transplanting) RPG farming : 30 Samples of 20 RPG plots of Bilpabla village YRMV rice farming : 30 Samples of 20 YRMV rice farmers Lebubunia village Second collection: April, 2006 (at rice harvesting time) RPG farming : 30 Samples of 20 RPG plots of Bilpabla village YRMV rice farming : 30 Samples of 20 YRMV rice

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

farmers Lebubunia village Soil samples test:

Soil analysis time : October, 2006 to May, 2007

2. Farm survey:

RPG farming : Bilpabla village, Khulna district Number of RPG farming : 90 Farm survey time : April and October-December, 2006 YRMV rice farming : Lebubunia village, Khulna district Number of YRMV rice farming : 20 Farm survey time : April, 2006 YRMV rice farming : Chanchra village, Jessore Number of YRMV rice farming : 90 Farm survey time : October-December, 2006

3. Water measurement record Water measurement time : Every week 1 May 2006 to 30 April, 2007

Source: Adapted from Barmon, 2006.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

149

3.3. Soil Sampling and Soil Analysis Methods

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

In order to assess the impact of RPG farming system on soil quality of MV rice fields, the soil samples were taken from RPG and YRMV rice farming systems. A total of 40 farmers (20 farmers from RPG and 20 from YRMV rice farming) were randomly selected from two study villages. Each of the sampled 20 RPG and YRMV rice farmers belonged to 30 farm plots. Soil samples were collected first at the beginning of rice transplantation and second after harvesting of MV rice of both RPG and YRMV rice farmers of Lebubunia village who produced rice in 2005-06. Soil samples of YRMV rice farming of Chanchra village of Jessore were not collected because of time and resource limitation. Each sample of soil was a mixture of nine sub-samples collected from nine different places of a particular farm plot. The soils were taken at 0-15 cm depth, which represents the cultivated topsoil. After collecting soils, the sample soils were placed in polythene bags and well dried by natural sunshine. After drying, the soils were again placed in polythene and levelled numerically and sealed for transportation to the laboratory for testing. As the present study conducts to explore the impact of RPG farming on soil quality (fertility), therefore, the samples as well as plots number were identified with same numerical value at the beginning of rice transplanting and at the harvesting times of MV rice cultivation. Soils were dried in air, grinded, and sieved with 0.5 mm mesh. Some soil chemical properties were analyzed by routine methods; briefly, pH (H2O, 1:2.5), pH(KCl, 1:2.5), EC (1:5), total carbon and nitrogen by the combustion method (C-N analyzer, Sumigraph NC1000), exchangeable cations extracted with ammonium acetate, phosphorus absorption coefficient, available P by the Troug method, hot-water extractable NH4-N and B, available zinc and copper extracted with 0.1 mol/L HCl and easily reducible Mn. The present study also collected various combinations of prawn feed that the farmers used in one prawn production cycle in 2005 through a farm records in order to explain the soil nutrient status of RPG farming.

4. RESULTS AND DISCUSSIONS 4.1. Impact of RPG Farming System on the Cropping Pattern in the Study Villages As mentioned earlier, three types of rice are produced in Bangladesh in three distinct seasons: aus (April to August), transplanted aman (T. aman) (August to December), and boro (January to April). Among them, aus and T. aman rice are produced in rainfed water and MV boro rice is produced in irrigated water (ground water or rivers and canals). Modern varieties rice was introduced in Bangladesh for the boro and aus season in 1967 and aman season in 1970. In 2002, only 32% area was irrigated under MV rice production in Bangladesh, (BBS, 2002). Irrigation and chemical fertilizers are not used local aus and T. aman rice production because the rice fields go under water. Farmers transplant MV boro rice from mid-January to mid-February, and harvest from mid-April to mid-May. Farmers usually use chemical fertilizers, pesticides, and irrigation for boro rice production. Along with rice crops, farmers

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

150

Basanta K. Barmon and Sanzidur Rahman

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

also cultivate oil seeds, potato, and vegetables in the comparatively high land during the winter season. The cropping pattern of the study villages is presented in Figure 3. Before the advent of RPG farming in Bilpabla village, the farmers cultivated only local aus and broadcasted aus and aman rice in swampland and transplanted aman (T. aman) rice in the upper lands. The familiar broadcasted aus and aman rice has almost disappeared mainly because of siltation of inland rivers and canals, embankments of rivers, and environmental changes. Oil seed crops such as rape, mustard and sesame were also produced on the land with comparatively high altitude located along the riverside. The life cycle of broadcasted aman was longer than the broadcasted aus rice though the sowing time was same for both types of rice. The sowing time of aus and aman rice is in April/May and harvesting time is in August for broadcasted aus and December for broadcasted aman. The farmer sowed aus and aman seeds together in April/May because after June/July the whole area was go underwater due to heavy rain and at that times it was not possible to transplant aman (T. Aman). This production system of local aus and floating aman rice together was locally known as ―Domuti‖.

Figure 3. Cropping patterns of the study villages.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

151

RPG farming system has changed the cropping patterns dramatically in the study area (Figure 3). The construction of RPG farming has created opportunity for crop diversification. Along with prawn and fish, farmers can now cultivate MV boro rice on the mid-field and vegetables on the dikes of the gher mainly for home consumption. Prior to the RPG farming, farmers cultivated oilseeds such as rape, mustard and sesame after the harvest of local broadcasted aman rice however, the RPG farmers are not able to cultivate oilseeds due to physical construction of RPG farming. The RPG farming system has increased vegetables production compared to the past. The farmers have also planted fruit trees (coconut, mango, guava, jackfruit, banana, papaya etc.) on the dikes. The production period of prawn and fish start from May/June to December/January; MV boro rice from the end of January to end of April; and vegetables throughout the year. Farmers in Chanchra village usually practice YRMV rice farming because the farms are located in relatively high altitude level that are not possible to convert into RPG farming system like Bilpabla village in Khulna district. MV boro rice is produced during January to April followed by local variety T. aman rice during July to December. The cropping system of Chanchra village is also presented in Figure 3.

4.2. Impact of RPG Farming System on Soil Fertility Status of the Rice Fields

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

4.2.1. The Physical and Chemical Properties of Soils The chemical and physical properties of soils in RPG and YRMV rice farming are presented in Table 2. Soil pH The term pH refers to the alkalinity or acidity of a growing media water solution. Soil pH and base saturation are the important chemical properties that influence soil nutrient availability and plant growth and the activities of soil micro-organisms and organic matter decomposition. All plants are not able to tolerate acidic or alkaline soils. Most of the field crops prefer neutral or slightly acidic soils because it promotes solubility of micro and macro nutrients for plant growth and development. Rice crops usually prefer slightly low acidic soils as compared to other crops. On average, the mean soil pH in rice field in RPG farming system at the beginning of transplanting and at the harvesting time of rice cultivation was 6.6 and 6.0, respectively. On the other hand, the mean pH in rice field in the YRMV rice at the beginning of transplanting and harvesting time of rice cultivation was 6.5 and 7.1, respectively. The mean pH of RPG farming has decreased after rice production, whereas, it has increased in YRMV rice farming after rice production. Electrical Conductivity (EC) Electrical conductivity (EC) is an important soil property related to salinity, and is often used for delineating other soil properties. EC measures the amount of total dissolved salts or the total amount of dissolved ions in the water. The mean values of EC at the beginning and at the end of MV production in Bilpabla and Lebubunia village is shown in Table 2. It appears from the table that the mean value of EC was low (71 Sm/m) at the beginning (December) of MV rice production under the RPG farming system, whereas, this value was

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

152

Basanta K. Barmon and Sanzidur Rahman

more than twice (159 Sm/m) for YRMV rice production in Lebubunia village. However, the average value of EC at end of rice harvesting (April) was almost the same for both farming systems. Table 2. Some chemical and physical properties of soils in Bilpabla and Lebubunia Bilpabla Properties of soil

Dec.

Apr.

Dec.

Apr.

2005

2006

2005

2006

pH(H2O)

6.6

6.0

6.5

7.1

pH(KCl)

5.9

5.5

5.8

6.5

ΔpH

-0.8

-0.5

-0.7

-0.6

EC

(mS/m)

71

161

159

143

Total C

(g/kg)

78

78

21

19

Total N

(g/kg)

6.1

5.9

2.0

1.7

13

13

10

11

43

39

25

24

12

11

10

9

0.9

0.7

0.8

0.7

3.8

5.3

3.4

4.6

C/N ratio Exchangeable cation

++

Ca

(cmolc/kg)

++

Mg +

K

+

Na

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Lebubunia

CEC

(cmolc/kg)

50

52

31

30

Base saturation

(%)

121

110

137

129

Cation ratio

Ca/Mg

3.5

3.4

2.6

2.8

[based cmol]

Mg/K

14

18

13

12

Ca/K

49

62

34

33

Available P (Troug)

(mg P/kg)

83

70

75

86

PAC

(g P/kg)

6.5

6.4

4.4

4.2

0.1 N HCl

Zn

2.7

3.1

2.7

2.3

1.2

1.5

7.3

6.2

(mg/kg)

Cu Hot H2O ext.NH4-N

(mg/kg)

120

75

61

54

Easily reducible Mn

(mg/kg)

72

57

72

74

Hot water ext. B

(mg/kg)

3.3

2.7

2.1

2.2

1.00

1.03

1.10

1.09

Appar. specific gravity

3

(g/cm )

Abbreviations:

EC: electro conductivity. CEC: cation exchange capacity. PAC: phosphorus absorption coefficient. Source: Adapted from Barmon, et.al., 2010.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

153

This result indicates that under RPG farming system, the mid-rice fields are washed out at the beginning of transplanting due to prawn production. On the other hand, at the end of rice harvesting, the EC value has increased, which indicated that the salts have accumulated along with production in both farming systems. Thus it could be concluded that even though the salts accumulate in rice fields in RPG farming system, after prawn production the rice field escaped from the problem of salinity.

Cation Exchange Capacity (CEC) Cation exchange capacity (CEC) refers to the amount of positively charged ions of soil and it is a useful indicator of soil fertility. Because it shows the ability of soil‘s important plant nutrients such as calcium (Ca++ ), magnesium (Mg++), potassium (K+), sodium (Na+) aluminium (Al+++), and ammonium (NH4+). In general, a soil contains more clay and organic matter (OM), which indicates its higher CEC. The CEC of soil in RPG farming was higher both at the beginning and at the harvesting of MV rice compared to YRMV rice farming, indicating that the soil in RPG farming system contains more clay and higher OM. In other words, the soil in RPG farming system is more fertile than that of the soil of YRMV rice farming.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Total Carbon (C) Soil organic carbon is the biggest part of the soil organic matter (SOM) and it is considered as the most important indicator of soil quality and productivity. SOM affects a soil's structure, water storage capacity and nutrient supply. On average, the total organic carbon (C) in the soils of rice field in RPG farming system was almost four times higher than the YRMV rice farming system, which also indicates that the soils in RPG farming system were more fertile than YRMV rice farming system. Total Nitrogen (N) Nitrogen is a major component of proteins, hormones, chlorophyll, vitamins and enzymes essential for plant life. It is the most important soil element for crop production. The availability of optimal nitrogen for crop production influences the crop yields and deficiencies reduce yields. The nitrogen content of soils was also higher (more than three times) in the soils of rice fields of RPG farming compared to YRMV rice fields, which indicates that the soils in RPG farming system accumulate more nitrogen that enhance the land productivity as compared to YRMV rice farming. Carbon Nitrogen (C/N) Ratio Carbon Nitrogen (C/N) ratio depends on the total C and N in the soils. C:N ratio of soils were almost same at the beginning of rice transplanting and at the harvesting of rice in RPG farming system. The C:N ratio was comparatively higher in the soils in RPG farming system than in the soils of YRMV rice farming system. This indicates that the RPG farming system has significant impacts on the soil fertility for MV rice production. Available Phosphorus Phosphorus is essential for plant growth. It is also necessary for seed germination, photosynthesis, protein formation and metabolism in plants. It is essential for flower and fruit

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

154

Basanta K. Barmon and Sanzidur Rahman

formation. Deficiency symptoms are purple stems and leaves; maturity and growth are retarded. Yields of fruit and flowers are poor. Premature drop of fruits and flowers may often occur. In general total P content in soil varies the range between 200-1500mg/kg. In the study area, the P content is higher than the general P content level in the soil. The P content has decreased significantly after rice production.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Base Saturation The percentage base saturation (BS%) is termed as the proportion of CEC satisfied by basic cations (Ca++, Mg++, K+, and Na+) and it is inversely related to soil acidity. In general, BS% increases when the pH of soil increases. The availability of nutrient cations such as Ca++, Mg++, and K+ to plants increases with increasing BS%. Base saturation is usually close to 100% in arid region soils. Base saturation below 100% indicates that part of the CEC is occupied by hydrogen and/or aluminum ions. Base saturation above 100% indicates that soluble salts or lime may be present, or that there is a procedural problem with the analysis. The base saturation (BS%) of soils in rice fields in the both types of farming system was above 100% at the transplanting and at the harvesting of rice. However, the BS% was lower in the soils in RPG farming system than YRMV rice farming which indicates that more soluble salts existed in the soils of YRMV rice farming system than RPG farming system. 4.2.2. Quantity of Nutrient Concentrations of Applied Feed to Prawn Production The quantity of nutrient concentrations of applied feed to prawn production is presented in Table 3. The present calculation was made based on per ha basis because the present study explores how much nutrient concentrations come from providing feeds to prawn production in 2005-06. It is noted that usually farmers supply feeds to prawn on the mid-rice field instead of canals because the prawns come onto mid-rice field of gher (locally known as chatal) in night for feeding. Therefore, the present study considers only the mid-rice field as a measurement of rice farm area even though some of the supplied feeds move from mid-rice fields to canal by prawns‘ feeding nature. It appears from Table 3 that the meat of mud snails, fishmeal and legume grain (pulses) are the main sources of total nitrogen (TN), soil organic C (SOC), available phosphorus (AV), as well as other soil nutrients. The experimental results show that on an average, about 257 kg, 64 kg and 34 kg N, and 1,105 kg, 626 kg and 307 kg SOC, respectively, came from meat of mud snails, fishmeal and legume grain (pulses) that farmers applied in per ha prawn production in 2005/06 production cycle. It is not clear that how much leftover feeds remain on per ha of mid-rice field, and how much nutrients were gathered on the mid-rice field as prawn faeces. But it is believed that a large amount of nutrients accumulate on the mid-rice field that is not possible in YRMV rice farming system. As a result, the soils in RPG farming become more fertile owing to the leftover feeds of prawn production.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Table 3. Element concentration of applied feed to prawn production in RPG farming in 2005-06 production cycle (Per ha basis)

N

P

K

Ca

Mg

Fe

Mn

Zn

Cu

cr.Si

Na

C

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

(kg)

Starter 1

0.44

0.12

0.06

0.34

0.04

0.01

0.0010

0.0010

0.0002

0.30

0.07

3.38

Wheat noodles

0.60

0.03

0.06

0.00

0.00

0.00

0.0003

0.0003

0.0001

0.00

0.00

13.40

Fish meal

64.83

15.08

12.06

33.17

4.52

1.77

0.2400

0.1100

0.0300

55.78

7.95

625.64

Beaten rice (Chira)

8.21

1.17

1.17

0.00

0.59

0.04

0.0100

0.0100

0.0010

1.17

0.03

261.02

Legume grain

33.62

2.74

7.55

1.37

0.69

0.34

0.0300

0.0300

0.0100

2.74

0.10

306.66

Broken rice

6.32

0.66

0.66

0.00

0.33

0.20

0.0100

0.0040

0.0010

1.00

0.00

139.27

Oil cake (mustard)

9.80

1.89

2.92

1.20

0.86

0.25

0.0100

0.0100

0.0002

1.72

0.05

79.07

Oil cake (soybean)

4.18

0.27

1.43

0.27

0.16

0.05

0.0030

0.0040

0.0010

0.27

0.00

24.75

Wheat bran

10.77

8.18

6.03

0.86

4.31

0.37

0.1100

0.0500

0.0030

7.75

0.56

200.31

Meat of mud snail

257.43

11.19

27.98

193.07

19.59

0.59

0.1000

0.3400

0.0500

5.60

6.75

1105.27

Total element con.

396.2

41.3

59.9

230.3

31.1

3.6

0.5

0.6

0.1

76.3

15.5

2758.8

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Feed items

Source: Adapted from Barmon, et.al., 2010.

156

Basanta K. Barmon and Sanzidur Rahman

4.3. Profitability of RPG Farming System 4.3.1. Characteristics of the Farm Scale Summary statistics of the farm sizes of the sampled farmers involved in the RPG and YRMV rice farming is presented in Table 4. Table 4 shows that the average RPG farm was 4.09 bigha, and that the size varied from 1.0 bigha to 21.0 bigha. The average rice farm size of the Chanchra area was 3.14 bigha, with a range of 0.66 to 15.18 bigha. In Bilpabla the average size was 2.52 bigha, with a range of 0.50 to 15.0 bigha. Generally, in Bilpabla it can be assumed that about 50 to 70% of RPG farmland is used for MV rice production. Table 4. Statistics of rice-prawn gher and year-round MV rice farming Farming systems

Mean

Max

Min

SD

Gher area (bigha)

4.09

21.00

1.00

3.23

Rice production area (bigha)

2.52

0.50

15.00

2.12

MV boro rice field (bigha)

3.14

15.18

0.66

2.63

MV aman rice field (bigha)

3.14

15.18

0.66

2.63

Rice-prawn gher (RPG) farming

Year-round MV (YRMV) rice farming

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Source: Adopted from Barmon, et.al., 2008a. Note: One bigha is equal to 0.5 acres or 0.2024 ha in the locality.

4.3.2. Costs, Returns, and Profitability of RPG Farming System As mentioned in the introduction, prawn and MV boro rice are the main products of the RPG farming system. In the early stages of RPG farming (1985-1995), farmers mainly used the meat of mud snails collected from small rivers, canals, swamplands and local ponds, as prawn feed. When the whole of the wetlands (swamplands) were converted into gher farming, mud snails gradually disappeared from these areas. Now farmers are applying various combinations of feed to prawns, on the basis of a trial-and-error method. The utilization of labor in agricultural sectors depends on many factors, such as cropping patterns, cropping intensity, potentiality of irrigation, and other intensive agricultural activities (Suryawanshi and Kapase, 1985). The green revolution has changed the agricultural land and labor productivity, and it has had considerable impact on labor demand and/or employment in developing countries. The adoption of new technology has substantially increased total agricultural employment, and has significantly contributed to the household income by increasing labor demand in developing countries (Estudillo and Otsuka, 1999). The diffusion of modern technology has increased the size of the labor market by increasing the demand for hired labor in Bangladesh (Hossain et al., 2000). However, Alauddin and Tisdell, 1995) argued that modern agricultural technology increased labor demand four-fold from the 1960s to the 1980s in the dry season, but the labor demand was stagnant in the wet season. The employment-generating effects of modern agricultural technology have slowed down in recent years in Bangladesh. The green revolution has increased labor absorption at

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

157

its early stage, but the labor absorption decreased in most developing countries after the adoption of the new labor-saving chemical and mechanical innovations (Jayasuriya and Chand, 1986).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Table 5. Cost and returns of rice-prawn (RPG) and year-round MV (YRMV) rice farming system Particulars Prawn production A. Variable costs 1. Prawn fingerlings 2. Carp fingerlings 3. Feed 4. Hired labor 5. Family labor 6. Medicine Sub total (A) MV rice production B. Variable costs 1. Seedlings 2. Land preparation 3. Hired labor 4. Family labor 5. Irrigation 6. Pesticidies 7. Fertilizers 8. Others Sub total (B) C. Fixed costs 1. Dep. of gher preparation 2. Monitoring house 3. Farm land 4. Land rent Total fixed cost ( C ) D. Total cost (A+B+C) E. Revenue 1. Prawn 2. Fish 3. Rice 4. Straw from rice 5. Vegetables Total Revenue (E) Total Profit (E-D)

Gher farming Bilpabla village (Taka) 45,080 1,155 57,419 19,734 23,785 1,470 148,643

MV rice farming Chanchra village (Taka) -

972 677 4,500 1,677 1,051 818 896 652 11,243

1,583 2,713 11,185 2,297 3,460 2,409 5,024 522 29,193

1,007 678 12,567 9,722 23,974 183,860

18,800 1,478 20,278 49,471

262,408 13,045 28,713 2,719 403 307,288 123,428

64,812 9,051 73,863 24,392

-

Source:Adapted from Barmon, et.al., 2008a. Notes: (1) Number of gher and MV rice farms sampled was 90 and 100, respectively. (2) Average gher and MV farm sizes were 4.09 bigha and 3.14 bigha, respectively. (3) One bigha is equal to 0.5 acres or 0.2024 ha in the locality. (4) 1 US$ = 72.65 Taka, December, 2006. (5) Depreciation of gher construction and the monitoring house was calculated by the straight-line method. In this method the depreciation is calculated by dividing the total expected depreciation value equally among the expected number years of the life of the gher (Hopkins and Heady, 1955). On the basis of the farm survey data, the economic life of gher farming was considered to be 25 years.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

158

Basanta K. Barmon and Sanzidur Rahman

The RPG farming system has created more temporarily hired and permanently hired labor as well as family labor demand compared with the YRMV rice farming, in southwest Bangladesh. RPG farming is a labor-intensive farming system. Temporarily and permanently hired labor mainly depends on family labor (Barmon et al., 2004b; Rutherford, 1994; and Kendrick, 1994). Usually, family laborers and temporarily hired laborers are used for MV boro and aman rice production. Temporarily-hired laborers are employed on a daily basis at the prevailing market wage rate at the time of employment. The cost of items associated with the RPG farming system includes the cost of prawn and carp fish fingerlings, various kinds of feed, labor, medicine, watching house, rice and vegetable seed/seedlings, land preparation (bullock), irrigation, pesticides and fertilizers. Gross return of gher farming includes revenue from prawn, fish, rice and vegetables. The costs, gross revenue, and profit of RPG and the YRMV rice farming are presented in Table 5 (detail explanation is in Barmon et al., 2008).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

4.4. Productivity of Two Main Inputs in RPG Farming System 4.4.1. The Concept of Water Productivity In general, productivity is a measure of performance expressed as the ratio of output to input. Water productivity is defined as the ratio of per unit amount of grain yield to per unit water used in crop production. Depending on the water flows, water productivity can be defined as rice grain yield per unit water evapotranspired or grain yield per unit total water input including irrigation and rainfall (Bouman and Tuong, 2001). The numerator (output derived from water use) can be defined in the following two ways- either physical output that can be total biomass or harvestable product or economic output that can be monetary value of output of agricultural production. The water input can be specified as volume (m3) or as the value of water expressed as the highest opportunity cost in alternative uses of the water. The economic output (monetary unit) is particularly convenient than physical output to measure water productivity when comparing different crops or different types of water use (Playan and Mateos, 2006). Water productivity can be increased by increasing yield and/or reducing water use. Bouman and Tuong (2001) showed that water productivity depends on water evapotranspiration. A wide variation of evapotranspiration reflects large variation of grain yield in the lowland rice production in the tropics. The yield also depends on the variety of germplasm of MV rice and production environments such as climate, soil characteristics, and production management. A large number of studies have been explained on water productivity on MV rice production on the basis of rain and irrigated water in tropical countries (Bhatti and Kijne, 1992; Bhuyan et al, 1995; Sandhu et al, 1980; Kitamura 1990; Misra et al, 1990; Khepar et al, 1997; Cabangon et al, 2002; and Dong bin et al, 2001). The present study considers monetary values of water usage in MV boro rice production because of the lack of data on total quantity of water usage in per unit MV boro rice production in YRMV rice farming system. Moreover, the evapotranspiration of water, outflows, runoff and leakage of water from MV rice field have ignored due to lake of data as well as for the sake of simplicity of the calculation of water productivity of MV boro rice production between RPG and YRMV rice farming.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

159

4.4.2. Water Productivity and Water-Saving An attempt has been made to compare water use in MV boro rice production under RPG and YRMV rice farming in this section. As mentioned earlier that only data on water used in MV boro rice production are available. The secondary data of water used in per MV rice production in YRMV rice production were incorporated from other secondary sources (Hassal and Associates, 1998). Moreover, due to time and resource limitations, only water used in two rice fields of two RPG farmers were considered. In Bangladesh, usually the crop cycle of MV boro rice is 120 days. As a result, the water used in MV boro rice production in RPG farming system is calculated for 120 days and compared with secondary data on water consumption of MV rice production (Hassal and Associates, 1998). The water input used in MV boro rice production in RPG and YRMV rice farming is presented Table 6. The table shows that one an average, about 3,000 m3 and 10,368 m3 water used in per ha MV boro rice production in RPG and YRMV rice farming, respectively. In other words, about more than four times higher water requires for MV boro rice production in YRMV farming compared to RPG farming. Table 6. Water used in rice production under RPG farming RPG farming Farms

YRMV rice farming Ratio

Area (m2)

Water used (m3)

Water used (m3)/ ha

Water used (m3)/ha*

RPG-1

3449.2

943.83

2736.37

10,368

3.79

RPG-2

3411.99

1016.79

2980.05

10,368

3.45

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Source: Adapted from Barmon, et.al., 2008b. Note: Hassal and Associates (1998)*.

4.4.3. Factor Shares, Water and Labour Productivity of RPG Farming System The factors share as well as water productivity of MV rice production under two farming system are presented in Table 7. It appears from the Table 7 that the water input (irrigation) was higher in MV boro rice production in RPG than YRMV rice farming. Per ha grain yield is higher in RPG farming in comparison with YRMV farming, whereas, irrigation cost is significantly lower in MV boro rice production in RPG than YRMV rice farming. The water productivity of MV boro rice production was about 27 and 11 in RPG and YRMV rice farming, indicating that the water productivity was more than two times higher in RPG farming as compared to YRMV farming. In other words, water input was efficiently used in MV boro rice production in RPG farming compared to YRMV rice farming.

5. CONSTRAINTS IN EXPANDING RPG FARMING SYSTEM The RPG system has also had significant impacts on the environment and ecology in Bangladesh (Kendrick, 1994; Kori, 1996; Ansary, 2000; Abedin et al 2000; Islam et al 2001; and Toufique 2002).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

160

Basanta K. Barmon and Sanzidur Rahman Table 7. Input costs, output and factor shares of MV rice production RPG farming

YRMV rice farming

Boro rice

Boro rice

Seeding

878

897

Land preparation

677

1,392

Irrigation

1,051

3,344

Pesticides

818

1,375

Chemical fertilizers

854

3,582

Total labor cost

4,932

6,642

Hired

3,467

6,549

Family

1,465

93

Total input cost

9,180

17,232

Total output (Taka)

28,713

36,946

Seeding

0.03

0.02

Land preparation

0.02

0.04

Irrigation

0.04

0.09

Pesticides

0.03

0.04

Chemical fertilizers

0.03

0.10

Total labor cost

0.17

0.18

Hired

0.12

0.18

Family

0.05

0.00

Water productivity

27.32

11.05

Labor productivity

5.82

5.56

Particulars Input costs (Taka):

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Factor Share:

Productivity:

Source: Adapted from Barmon, et.al., 2008b. Note: US $ 1 is equal to 68.40 taka (December, 2007).

5.1. Impacts on the Environment and Ecology The RPG farming system has negative impacts on ecology. Fish diversity and fish catches has decreased in the swamplands, canals and rivers, because of the siltation or blockage of fish migration routes, water pollution as well as decreased swampland area due to

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

161

gher construction (Abedin at et, 2000; and Islam, 2001). They concluded that indigenous fish are disappearing day by day, and some indigenous varieties have already become extinct. Along with indigenous fish, tortoise and frogs are also disappearing. Another study was conducted by Islam et al (2001) and concluded that fish availability is decreasing due to over fishing of Post Larvae (PL). The main input of prawn production – the mud snail has two direct significant negative impacts on ecology and human health. People have collected mud snails (Pila globosa) intensively from swamplands, canals and river to use as feed for prawn production; as a result, the mud snail has already disappeared in greater Khulna district. Now the farmer is importing mud snail from other districts as well as India. This unplanned intensive harvest of mud snail has negative impacts on ecology (Kendrick, 1994; Chowdhury, 1999; Dutta, 2001; and Islam, 2001). Dutta (2001) mentioned in his study that mud snails play an important role in wetland ecosystem and soil chemistry. Williams and Khan (2001) mentioned that the women and children who crush the mud snail for prawn feed suffer from skin irritations and respiratory complaints. In addition, the farmers often dump the shell of mud snails at the edge of roads or in nearby canals, thereby, polluting the local waterway and sometimes blocking the natural drainage system. However, recently this shell is being used as an input of poultry feed and lime. The grinding process of the shells creates a great deal of dust that also causes respiratory problems for human health because the grinding mills are mainly located in residential areas (Barmon, 2006).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.2. Impacts of RPG Farming System on Livestock The impact of RPG farming on livestock is ambiguous. Kendrick (1994), Williams and Islam (1999) and Williams and Khan (2001) argued that livestock has decreased mainly due to unavailability of grazing land and unavailability of fodder crop. On the other hand, Barmon et al (2003) concluded that this farming system has a positive impact on livestock. Livestock and poultry have increased compared to shrimp gher farming. Before rice-prawn gher farming had started, landlords or rich farmers had a large number of cows and buffaloes and hired boys to take care of the cows but most of the small, landless and marginal landowners had no cow or some-times only owned a few in numbers. Livestock was not equally distributed among the people. Now, most are rearing more than two to three cows for milk and cowdung. Instead of unavailable grazing fields, the gher farm owners‘ as well as landless farmers collect feed (grasses) from embankments and store by-product of rice (straw) for cattle feed on gher embankments. The farmers usually use stored straw in the rainy season when feed is not available.

5.3. Land Tenurial Arrangement The RPG farming system has significant impacts on institutional change in land tenurial arrangement. The land tenurial arrangement has changed from traditional sharecropping to a fixed rent system after the introduction of the RPG farming system. The RPG farming system is a capital intensive enterprise and needs proper management for optimal production to protect virus disease as well as poaching of prawns. Moreover, the landlords and the tenants

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

162

Basanta K. Barmon and Sanzidur Rahman

cannot predict the main output before harvesting. As a result, the land tenurial arrangement has converted from traditional sharecropping system to fixed rent system. The land rent depends on land productivity, distance from river, and altitude level. The land rent has increased over the years because of larger participation of marginal and landless farmers as it is a profitable enterprise compared to rice farming. The landlords mainly engage in non-farm activities and a small portion of their total gher farm is operated mainly for home consumptions using permanent hired labor. Even though the RPG farming is a profitable enterprise, landlords do not operate total gher farm because permanent hired labor disrupt prawn production at every step. As a result, the landlords rent out gher farms to marginal and landless farmers on fixed rent agreement basis. The RPG farming system has redistributed the landholding patterns due to the participation of marginal and landless farmers. Some marginal and landless farmers became small landowners after the successful operation of RPG farming (Barmon, 2006).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

5.4. Constraints of Production and Marketing System of Prawn under RPG Farming 5.4.1. Risk and Uncertainty of Prawn Production1 Risk and uncertainty are pervasive characteristics of agricultural production and play a significant role in the production choice, output, and its future market price. Risks and uncertainties are always associated with RPG farming. The main product of RPG farming is prawn, and the optimal production of prawn depends on several uncontrollable environmental conditions or factors such as adverse weather conditions (seasonal flooding, high temperature and draught), viral diseases and controllable factors such as feeding system, feeding types, and proper managements. But the natural risks such as optimal rain, higher temperature, flood and unknown viral disease are beyond the control of farmers and these factors, particularly viral diseases and higher temperature and draught (the leasing time of prawn fingerlings) seriously affect mortality rate of postlarvae as well as the yield of prawn. In addition, the feeding types and system also affect prawn production. Usually meat of mud snails is the main feed for optimal growth of prawn. Along with mud snail, the farmers also use different types of home-made feed. As a result, the yield of prawn widely varies within the gher farming. In general if the natural risks such as viral disease and weather conditions are not severe and the farmers use meat of mud snails for prawn feed and take care properly the farmers get optimal production of prawn. The results of field surveys suggested that high risks and uncertainties are associated with rice-prawn gher farming; thus, the production is very erratic. 5.4.2. Constraints in Prawn Marketing The main product of gher farming system shrimp/prawn is the second largest export item in Bangladesh and reached the international markets through a number of channels. Every channel receives a substantial profit, therefore, per unit market price of shrimp/prawn have increased in every channels. In other words, every segment of the channel have significant profit margin. The field survey showed that the commission agents receive only commission 1

This section has heavily drawn on Barmon (2004a).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

‗Gher‘ Farming System of Bangladesh

163

fee taka 20 for per shrimp/prawn sale to processors and exporters. Therefore, no financial risk involve in this segment of the marketing channel. Faria (traders) play very interesting role in the marketing channel, because sometimes, they buy per kg shrimp/prawn from farmers at local market price. However, they earn profit. They buy shrimp/prawn from farmers without grading or underweight or dry weight of shrimp/prawn at gher farming areas. After buying, they grade according to size of grading system, and keep shrimp/prawn into water of plastic containers or big aluminum pot for 1-2 hours. After absorbing water, weight of shrimp/prawn increases as compared to gher farming areas. Therefore, even though they buy shrimp/prawn from farmers at the same existing market price, they earn substantial profit from their trading. Processors and processors/exporters are the final segment of the marketing channel. As they invest a large amount of money in this trading system and a large number of financial risks are involved, they earn maximum profit from this marketing channel. Usually, the exporters/processors export the shrimp/prawn in the markets of EU, USA and Japan through air freight and ship. Sometimes, the international company send back to the exporters because of proper packing, proper HACCP criteria etc. As a result, they face huge financial loss from this trading. Both backward and forward agents/actors are linked in the shrimp/prawn industry. The backward agents/actors play roles at the different points from fry collection from natural sources or hatcheries to selling farmers and the forward agents/actors play role from the different points from production to selling in international markets. The field survey reports that the agents/actors of the backward segments do not have any monopoly or monopsony power to set market price. The market price mainly depends on the availability of wild fry from natural sources as well as hatcheries. However, the agents/actors of the forward segments have monopoly and monopsony power to set market price. The middlemen of the forward segments named aratdar and faria set the market price to discuss with the other faria and aratdar in the same local market. Moreover a number of constraints those hinder smooth prawn marketing reported by farmers and traders, including poor road and transport facilities, higher transport costs, poor supply of ice, and lack of money for the business. In addition, poor electricity supply, labor unrest, and political disturbances (i.e., road blocks, strikes) also affect prawn marketing (Ahmed et al. 2009).

5.4.3. Social Status and Social Conflicts The RPG farming has both significant positive and negative impacts on the local societies. All participants in the RPG farming including farmers, local traders (faria and bepari), and agents, have improved their standards of living, social status, purchasing power, ability as an economic sector, food consumption, children‘s education, health facilities, sanitation and drinking water supplies through tube-wells. However, local prawn traders have gained more than the farmers. Traders have improved their social and economic conditions through prawn marketing. They have broadly improved their housing conditions, and profits are used to replace bamboo roofs and walls with tin sheets and wood. On the other hands, most of the prawn farmers did not improve their socioeconomic conditions due to lack of skills, poor education, inadequate financial support, and high interest loans from moneylenders (Ahmed et.al. 2010).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

164

Basanta K. Barmon and Sanzidur Rahman

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The RPG farming has substantially improved food security in the locality. Prior to PRG farming, almost all poor farmers took food twice a day. Nowadays, they are able to eat rice three times a day and also eat better quality food, including fish, meat, milk, eggs, fruits and vegetables. Vegetables are now more abundant and are also cheaper as a result of dike cropping, and farmers have benefited from selling these. Most the farmers are enjoying fish (from gher), milk and eggs (rearing homestead), and fruits (from dike of gher) that were not possible in the past (Ahmed et. al. 2010; Barmon et al. 2006). The RPG farming has negative impacts on the local society as well. The RPG is a capitalintensive enterprise and a number of risks and uncertainty including disease, draught floods etc involved in prawn production. The poor and small farmers borrowed loans from local moneylenders, landlords and local traders with high interest rate at about 120% annually. Farmers often used their principal asset, land, as collateral. Sometimes they do not get good production of prawn due to lack of technical knowledge, uncontrollable flood, draught, disease etc. Consequently, they sell their piece of lands to landlords and moneylenders. As a result, many of them actually became poorer, or at least potentially more vulnerable. In some cases, rich farmers and wealthy people forced poor farmers to sell their land. Friction between the two sides sometimes led to scuffles involving villagers and hired enforcers employed by the wealthy. Some of the minority Hindu people feel insecure due to conflict with Muslims, and a number have migrated to India, selling their land and prawn farms to others. The RPG farming has also disrupted social bonding (social process and system), increased sexual harassment, decreased rate of higher education in the locality. Usually poor women work in various activities of prawn production with male laborers. Moreover, mainly women are engaged in de-heading, icing, packing etc. and most of these operated at night. Sometimes, women sexually harassed by their counterpart male labour and depot owners.

CONCLUSIONS AND POLICY IMPLICATIONS (NEEDS TO BE SHORTENED AND REVISED) RPG farming system is an indigenous technology solely developed by local farmers since the mid 1980s in southwest parts of Bangladesh. RPG was an advanced agricultural technology followed by ―Green Revolution‖ in Bangladesh. The RPG farming is locally known as ―White Revolution‖ and prawn as ―White Gold‖. RPG farming has significantly positive impacts on soil quality and land productivity as compared to YRMV rice farming system in Bangladesh. Soils of rice fields of YRMV rice farming is more salinity affected than that RPG farming. The main reason is that the rice fields under RPG farming are washed out every year during prawn production. The leftover feeds of prawn production provide a significant amount of soil nutrients such as nitrogen, soil organic matter, phosphorus, potassium and other nutrients to soils in fields for MV rice under RPG farming system.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

‗Gher‘ Farming System of Bangladesh

165

As a result, farmers in RPG farming used comparatively less chemical fertilizer for per ha MV rice production compared YRMV rice farming. Some farmers do not apply chemical fertilizer at all in rice fields in MV production even though the per ha yield is almost similar to other RPG farmers which also indicated that the soil quality as well as soil fertility has improved due to the leftover feeds of prawn. MV boro rice grain yield in per ha land was higher in RPG farming system as compared to the YRMV boro and aman rice production. Farmers have gained more agricultural income (more than five times higher) as well as household income (more than double) from RPG farming as compared to YRMV boro and aman rice production in Bangladesh. The household income per capita in the RPG farming area is about double that of the YRMV rice farming area, and about four times higher than that of the people in rural Bangladesh. Therefore, it can be concluded that the RPG farming system has created a good production environment for MV rice farming. This farming system has also created employment opportunities both for hired and family labor, which has significant impact on household income. RPG farming has significantly positive impacts on water productivity for MV boro rice production compared to YRMV rice farming. Water input is also efficiently used in RPG farming than YRMV farming. Unproductive water runoff and/or water outflows are very small during irrigation times of crop growth period MV rice production in RPG farming than YRMV rice farming. Moreover, large-scale water is required for soaking of land preparation for rice transplanting in YRMV rice farming. As ground water is used in MV rice production, the rice fields were affected by sanilization. Preserved water that comes from rainfall and flooding in rainy season, used in MV rice production in RPG farming system. The rental contract agreement also changed from a variable sharecropping to a fixed rent system. Since more natural risks and uncertainties are involved in gher farming as compared to rice production, therefore, the land tenure system has changed from traditional sharecropping system to fixed cash system. A large number of value chain activities are involved in shrimp/prawn industry from production stage of shrimp/prawn to final exporting stage aboard. All segments of mud snail trading channel, fry trading channel, shrimp/prawn exporting channel as well as agro-based industry that established using shell of mud snails and legs of shrimp/prawn add a significant value chain. Male and female laborers, as well as children are engaged in various activities in the trading channels in shrimp/prawn industry. Even though the farmers bear all the production risks, they did not get the profit like other agents of the marketing channels of shrimp/prawn industry. All agents of marketing channels gain more financial benefits than the producers of shrimp/prawn of Bangladesh. Nevertheless, after considering all the pros and cons of gher farming system, it can be safely concluded that the system has provided a largely win-win solution to the farming population and associated stakeholders and could be a desirable strategy to foster future growth of the Bangladesh agricultural sector.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

166

Basanta K. Barmon and Sanzidur Rahman

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

REFERENCES Abedin, J., G. Sarker, and A. Hena., 1997. ―A Cost Benefit Analysis of Current Gher Farming System Practices in Bagherhat District‖. Paper Presented at the CARE Bangladesh Aquaculture Workshop, BARD, Comilla. Abedin, J., Islam, S., Chandra, G., and Q.E. Kabir (2000). Freshwater prawn (Macrobrachium rosenbergii) sub-sector study in Bangladesh. Greater options for local development through aquaculture (GOLDA) project, CARE, Bangladesh. Funded by the department for international development, UK. Ahmed, N., E.H. Allison and J.F. Muir. 2010. Rice-fields to prawn farms: A blue revolution in southwest Bangladesh? Aquaculture International, (forthcoming). Ahmed, N., C. Lecouffe, E.H. Allison and J.F. Muir. 2009. The sustainable livelihoods approach to the development of freshwater prawn marketing systems in southwest Bangladesh. Aquaculture Economics and Management, 13: 246-269. Ahmed, N., H. Demaine and J.F. Muir. 2008a. Freshwater prawn farming in Bangladesh: History, present status and future prospects. Aquaculture Research, 39: 806-819. Alauddin, M. and C. Tisdell, 1995. ―Labor Absorption and Agricultural Development: Bangladesh‘s Experience and Predicament‖. World Development, Vol. 23, pp. 281-297. Ansary, M.A.J. (2001). Compilation of environmental diaries from all thana offices in 2001. Greater options for local development through aquaculture (GOLDA) project, CARE, Bangladesh. Funded by the department for international development, UK. Barmon, B.K. (2003). Impact of rice-prawn gher farming on agricultural income in Bangladesh-A Case Study of Khulna District, MS Dissertation. Laboratory of Development Economics, Department of Agricultural Economics, Hokkaido University, Japan. Barmon, B.K., 2004a. ―Impacts of Rice-prawn Gher Farming on Land Tenure System in Bangladesh- A Case Study of Khulna District‖. The Bangladesh Journal of Agricultural Economics, Vol. 27, No. 2, pp. 75-86. Barmon, B.K., T. Kondo, and F. Osanami., 2004b. ―Labor Demand for Rice-Prawn Gher Farming in Bangladesh: A Case Study of Khulna District‖. The Review of Agricultural Economics. Hokkaido University, Japan, Vol. 60, pp. 273-287. Barmon, B.K., T. Kondo, and F. Osanami., 2006. ―Problems and Prospects of Shrimp and Rice-prawn Gher Farming System in Bangladesh‖. Journal of Bangladesh Studies, Vol. 8, No. 2, pp. 61-73. The Pennsylvania State University, Erie, USA. Barmon, B.K. 2006. Socio-economic impacts of Rice-prawn gher farming system in Bangladesh. Unpublished PhD Dissertation, Laboratory of Development Economics, Department of Agricultural Economics, Hokkaido University, Japan. Barmon, B.K., T. Kondo, Osanami, F. 2008a. Inputs Used in Modern Variety (MV) Rice Farming and Household Income: A Comparative Study of Rice-prawn Gher and Yearround MV Rice Farming System in Bangladesh. The Review of Agricultural Economics. Vol.63, pp. 1-18. Barmon, B.K. Kondo, T, Osanami, F. 2008b. Water productivity of modern variety of rice production: rice-prawn and year-round rice farming systems in Bangladesh. Asia-Pacific Journal of Rural Development, 18: 99-118.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

‗Gher‘ Farming System of Bangladesh

167

Barmon, B.K. Kondo, T, Osanami, F. 2009. Agricultural Technology Adoption and Land Productivity: Evidence from the Rice-Prawn Gher Farming in Some Selected Areas of Bangladesh. Asia-Pacific Journal of Rural Development, Vol. 19, No. 2, pp. 73-101. Barmon, B.K. Kondo, T, Yamaguchi J, Osanami, F 2010. Impacts of Rice-Prawn Farming System on Soil Quality and land Productivity for Modern Varieties (MV) of Rice Production in Bangladesh, Asian Journal of Agriculture and Development, Vol. 7, No. 2 (forthcoming). BBS, 2002. Bangladesh Bureau of Statistics. Statistical Yearbook of Bangladesh. Planning Division, Ministry of Planning, Government of the People‘s of Bangladesh, 2002. Bhatti, M.A. and J.W. Kijne., 1992. Irrigation Management Potential of Rice/Rice Production in Punjab of Pakistan. In: Murty, V.V.N. and Koga, K. (eds) Soil and Water Engineering for Rice Field Management, Proceedings of the International Workshop on Soil and Water Engineering for Rice Field Management, 28–30 January 1992. Asian Institute of Technology, Bangkok, Thailand, pp. 355–366. Bhuiyan, S.I., Sattar, M.A. and M.A.K. Khan., 1995. ―Improving Water use Efficiency in Rice Irrigation through Wet Seeding‖. Irrigation Science, Vol.6, No. 1, pp. 1–8. Bouman, B.A.M. and T.P. Tuong., 2001. ―Field Water Management to Save Water and Increase its Productivity in Irrigated Rice‖. Agricultural Water Management, Vol. 49, No. 1, pp. 11–30. Cabangon, R., Tuong, T.P., Tiak, E.B. and N.B. Abdullah., 2002. Increasing Water Productivity in Rice Cultivation: Impact of Large-scale Adoption of Direct Seeding in the Muda Irrigation System. In: Direct Seeding in Asian Rice Systems: Strategic Research Issues and Opportunities. Proceedings of an International Workshop on Direct Seeding in Asia, Bangkok, Thailand, 25–28 January 2000. IRRI, Makati City, Philippines, pp. 299– 313. Datta, D.K., 2001. ―Ecological Role of Fresh Water Apple Snail Pila globosa and the Consequences of its Over-harvesting from Beel Ecosystem of Bagerhat and Gopalgonj District‖, A Study Report. Study Carried out Jointly by Khulna University and GOLDA Project of CARE Bangladesh. Funded through Department for International Development. Chowdhury, M.H. (1999). Study on Thana level trading system. A study report of Greater options for local development through aquaculture (GOLDA) project, CARE, Bangladesh. Funded by the department for international development, UK. DOF, (2009). Fishery Statistical Yearbooks of Bangladesh. Department of Fisheries, Dhaka. Dong Bin, Loeve, R., Li, Y., Chen Chongde, Deng Li and D. Molden., 2001. Water Productivity in Zhanghe Irrigation System: Issues of Scale. In: Barker, R., Loeve, R., Li, Y. and Tuong, T.P. (eds) Proceedings of the International Workshop on Water Saving Irrigation for Rice Rice, 23–25 March 2001, Wuhan. SWIM Publication, International Water Management Institute, Colombo, Sri Lanka, pp. 97–115. Estudillo, J.P. and K. Otsuka., 1999. ―Green Revolution, Human Capital, and Off-farm Employment: Changing Sources of Income among Farm Households in Central Luzon, 1966-1994‖. Economic Development and Cultural Change, Vol. 47, pp. 497-523. Hassal and Associates., 1998. Climate Change Scenarios and Managing the Scare Water Resources of the Macquarie River, Consultancy Report Prepared for the Australian Greenhouse office, Canberra, Australia.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

168

Basanta K. Barmon and Sanzidur Rahman

Hopkins, J.A. and E.O. Heady., 1955. ―Farm Records and Accounting‖. Fourth edition. Composed and Printed by the Iowa State College Press, Ames, Iowa, U.S.A. Hossain, M., Gascon, F. and E.B. Marciano., 2000. ―Income Distribution and Poverty in Rural Philippines: Insights from Repeat Village Study‖. Economic Political Weekly, Vol. 35, No. 52, pp. 4650-4656. Islam, S., Dutta, G.C., and M. H. Chowdhury (2001). Environmental impact of catching PL (Post Larvae) of Prawn and Shrimp from coastal area. Greater options for local development through aquaculture (GOLDA) project, CARE, Bangladesh. GPO Box No.226, Dhaka 1000. Islam, M.S., 2008. From pond to plate: Towards a twin-driven commodity chain in Bangladesh shrimp aquaculture. Food Policy, 33: 209-223. Islam, K.R., and R.R. Weil., 2000. ―Land Use Effects on Soil Quality in a Tropical Forest Ecosystem of Bangladesh‖. Agriculture, Ecosystems and Environment, Vol. 70, pp. 9-16. Jayasuriya, S.K. and R.T. Shand., 1986. ―Technical Change and Labor Absorption in Asian Agriculture: Some Emerging Trends‖. World Development, Vol. 14, pp. 415-428. Kendrick, A., 1994. ―The Gher Revolution: The Social Impacts of Technological Change in Freshwater Prawn Cultivation in Southern Bangladesh‖, The Report of a Social Impact Assessment Prepared for CARE International in Bangladesh with Support from the Bangladesh Aquaculture and Fisheries Resource Unit (BAFRU). Khepar, S.D., Sondi, S.K., Kumar, S. and K. Singh., 1997. Modeling Effects of Cultural Practices on Water Use in Rice Fields – A Case Study. Research Bulletin, Publication No. NP/SWE-1, Punjab Agricultural University, Ludhiana, India. Kitamura, Y., 1990. Management of an Irrigation System for Double Cropping Culture in the Tropical Monsoon Area. Technical Bulletin 27, Tropical Agriculture Research Centre, Ministry of Agriculture, Forestry and Fisheries, Tsukuba, Ibaraki, Japan. Khondaker, H.R., 2009. Prawn hatchery development in Bangladesh: problems and potentials. In: M.A. Wahab and M.A.R. Hossain (eds.), Abstracts – National workshop on Freshwater Prawn Farming in Bangladesh: Technologies for Sustainable Production and Quality Control, 9 July 2009, Dhaka, Bangladesh, p. 11. Mishra, H.S., Rathore, T.R. and R.C. Pant., 1990. ―Root Growth, Water Potential, and Yield of Irrigated Rice‖. Irrigation Science 17, 69–75. Nijera Kori., 1996. Profit by Destruction. International Workshop on Ecology, Politics and Violence of Shrimp Cultivation, 2/4, Block-C, Lalmatia, Dhaka-1207, Bangladesh. Rahman, S., Barmon, B.K. Ahmed, N. 2010. ―Diversification economies and efficiencies in a ‗blue-green revolution‘ combination: a case study of prawn-carp-rice farming in the ‗gher‘ system in Bangladesh‖ ‗Aquaculture International’ (in press). Rutherford, S, 1994. ―CARE and Gher: Financing the Small Fry‖, The Report Prepared for CARE International in Bangladesh with Support from the Bangladesh Aquaculture and Fisheries Resource Unit (BAFRU. Sandhu, B.S., Khera, K.L., Prihar, S.S. and B. Singh., 1980. ―Irrigation need and Yield of Rice on a Sandy Loam Soil as Affected by Continuous and Intermittent Submergence‖. Indian Journal of Agricultural Science, Vol. 50, No. 6, pp. 492–496. Suryawanshi, S.D., and P.M. Kapase., 1985. ―Impact of Ghod Irrigation Project on Employment of Female Agricultural Labor‖. Indian Journal of Agricultural Economics, Vol. 60, No. 3, pp. 240-244.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

‗Gher‘ Farming System of Bangladesh

169

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Toufique, K. A. (2002). Community responses to environmental degradation due to shrimp aquaculture in Bangladesh. Bangladesh Institute of Development Studies (BIDS). Paper for presentation in the 9th Biennial Conference of the International Association for the Study of Common Property on the Commons in an age of Globalization to be held in Victoria Falls, Zimbabwe, 17-21 June. Williams, D., and S. Islam (1999). Study report on impacts of gher farming on agriculture and livestock. Greater options for local development through aquaculture (GOLDA) project, CARE-Bangladesh. Funded by the Department For International Development (DFID), UK. Williams, D., and N.A. Khan (2001). Freshwater prawn farming in gher systems: Indigenous technology developed in south-west Bangladesh. Greater options for local development through aquaculture (GOLDA) project, CARE-Bangladesh, GPO Box No. 226, Dhaka 1000.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editors: Laura M. Contreras, pp. 171-186

ISBN: 978-1-61209-630-8 ©2011 Nova Science Publishers, Inc.

Chapter 6

THE IMPACT OF EU COMMON AGRICULTURAL POLICY ON BEEF PRODUCTION: A DYNAMIC MODELLING OF PRODUCER'S BEHAVIOUR Isabelle Piot-Lepetit European Commission, Joint Research Centre (JRC), Institute for Prospective Technological Studies (IPTS), Seville, Spain1,2

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ABSTRACT When the Common Agricultural Policy (CAP) was originally established in the early 1960s the aim of the policy was to encourage farmers to produce more by offering them subsidies and putting systems in place that would guarantee them a high price for their products. However, by the 1980s this had led to large surpluses of products and calls for reform. As a consequence several reforms and adjustments of the CAP took place in the 1990s, culminating in 1999 with the introduction of the Agenda 2000 reform. This led to the last major reform of the CAP in 2003. The main aspect of the 2003 reform was the replacement of numerous income and production subsidy schemes with the Single Payment Scheme. This meant that payments to farmers were no longer linked to production or the number of animals kept. Instead, a form of basic income support is given to farmers who maintain their land according to agricultural and environmental compliance requirements. Regarding the Common Market Organization of beef and veal, the 2003 reform of the CAP severed the link between headage and payments and replaced it by a single farm payment based on historical entitlements. A system of premiums remains in force, subject to certain conditions, in the form of additional payments to the farmer in order to avoid production abandonment. After a survey of the CAP policy on direct aids and in the beef sector, this chapter develops a microeconomic model for analysing the impact of market prices and premiums on beef production. The modelling framework is dynamic. It takes into account the cattle herd renewal resulting from biological constraints, the heterogeneity of the herd 1

Disclaimer: The views expressed are purely those of the author and may not in any circumstances be regarded as stating as official position of the European Commission. 2 EC-JRC-IPTS, Edificio Expo, C/ Inca Garcilaso, 3, E-41092 Seville, Spain, Email: isabelle.piot-lepetit@ec. europa.eu. Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

172

Isabelle Piot-Lepetit composition and the fact that producers have the choice between keeping an animal in the herd and slaughtering it. It characterizes the parameters that influence beef supply decisions as well as cattle herd management by taking into account time adjustments, price expectations and CAP support instruments. Results show that producers‘ decisions are influenced both by market prices and direct support schemes, but the impact is different depending on the herd composition.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

INTRODUCTION This chapter contributes to the literature on decoupling by examining the effects of producer payment schemes on the beef supply response and cattle herd composition. It focuses on the dynamics of beef production in the European beef sector. The EU beef sector is largely influenced by the Common Agricultural Policy (CAP). Two CAP reforms are analyzed in this chapter: the 1992 and the 2003 CAP reform. The 1992 CAP reform shifted from market price supports to direct payments to producers. The 2003 CAP reform goes a stage further since many of the direct payments that have been linked to production are provided in the form of a Single Payment Scheme. Regarding the Common Market Organization of beef and veal, the 2003 reform of the CAP severed the link between headage and payments and replaced it with a single farm payment based on historical entitlements. Instead a form of basic income support is given to farmers who maintain their land according to agricultural and environmental compliance requirements. A system of premiums remains in force, subject to certain conditions, in the form of additional payments to the farmer in order to avoid production abandonment. An extensive literature in the agricultural sector has studied the impacts of income support programs on producers‘ decisions. Though agricultural policies can have complex effects, the analysis on the supply response may be complicated when the production is dynamic. For instance, beef supply has long been viewed as a challenge for modelling and forecasting. Indeed, cattle production is associated with a well-defined biological structure that effectively limits the capacity of producers to respond in the short run. Each cow is both a capital (to be added to the breeding herd) and consumption good (to be sold for slaughtering). As noted by Reulinger (1966) and Jarvis (1974), an increase in the market price may actually cause producers to reduce the supply of animals going to market in the short run in order to take advantage of higher prices in the future. The result is that a negative relationship between price and quantity supplied may be observed in the short run. Beef supply should also be disaggregated by animal categories. For Nerlove and Fornari (1998), this distinction is important because the economic function of each animal in the herd differs according to its sex, age and productive ability. Furthermore, producers have to make production decisions on the basis of expected prices (e.g. Mundlak and Huang, 1996, Rosen et al., 1994). The chapter provides a model of the beef supply response within a dynamic microeconomic framework, taking into account the specific features of this kind of production - cattle herd renewal dynamics linked to biological changes in the herd, heterogeneity of production, capital versus consumer good aspect of cattle, choices between keeping and slaughtering an animal, expected prices and CAP support instruments. This chapter makes several contributions towards understanding beef supply response. The model describes different categories of cattle and allows the analysis of the impact of slaughter

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

173

prices and existing premiums on the management of the herd by cattle category. In particular, the chapter studies how the choice between keeping an animal and slaughtering it (the beef supply response) is modified when exogenous variables (market prices and premiums) are changed. This is done by considering the cattle herd as a capital good. Changes in the capital stock represent an investment decision that is influenced by market prices and policy payments. Furthermore, as each animal grows older its capital value is expected to change, implying that investment decisions in the cattle herd are different for each age range. The cattle herd is also considered a consumption good. The beef supply is seen as a disinvestment in the capital stock and is influenced both by market prices and CAP supports. Replacement decisions are linked to the biological dynamics of the cattle herd. The chapter is organized as follows. Section 2 presents the policy background of this study. Section 3 describes the dynamic microeconomic model, which is based on the cattle farmer‘s behaviour whose objective is to maximise expected profits over his entire working lifespan. This profit function is maximised by dynamic programming methods to obtain the relevant behavioural relations that determine the model specification. Section 4 reports the results derived from the model. Section 5 concludes.

POLICY BACKGROUND

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The Common Agricultural Policy The aim of the Common Agricultural Policy (CAP) is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage. The creation of a Common Agricultural Policy was proposed by the European Commission. It followed the signature of the Treaty of Rome in 1957, which established the Common Market. The initial objectives were set out in Article 39 of the Treaty: (i) to increase productivity, by promoting technical progress and ensuring the optimum use of the factors of production, in particular labour; (ii) to ensure a fair standard of living for the agricultural community; (iii) to stabilise markets; (iv) to secure availability of supplies; and (v) to provide consumers with food at reasonable prices. By 1962, three major principles had been established to guide the CAP: market unity, community preference and financial solidarity. Since then, the CAP has been a central element in the European institutional system and has been reformed several times. In 1972, the Mansholt Plan3 defined three European directives which concerned the modernisation of agricultural holdings, the abandonment of farming and the training of farmers. Then, the 1980s was the decade that saw the first reforms of the CAP. Due to huge overproduction, the CAP was becoming expensive and wasteful. These factors implied the introduction of a quota on dairy production in 1984 and a ceiling on EU expenditure to farmers in 1988. In 1992, the MacSharry reform4 was created to limit rising production, while at the same time adjusting the trend toward a freer agricultural market. The reform reduced levels of support by 29% for cereals and 15% for beef. It also created set-aside payments to withdraw 3 4

Named after the European Commissioner for Agriculture, Sicco Mansholt. Named after the European Commission, Ray MacSharry.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

174

Isabelle Piot-Lepetit

land from production, payments to limit stocking levels, and introduced measures to encourage retirement and forestation. Furthermore, the 1992 CAP reform was designed to reach an agreement with the EU external trade partners at the Uruguay of the General Agreement on Tariffs and Trade (GATT) talks with regards to agricultural subsidies. The Agenda 2000 reforms divided the CAP into two pillars: production support and rural development. Several rural development measures were introduced including diversification, setting up producer groups and support for young farmers. Agri-environmental schemes became compulsory for all Member States. The market support prices for cereals, milk and milk products, and beef and veal were stepwise reduced while direct coupled payments to farmers were increased. On 26 June 2003, EU farm ministers adopted a fundamental reform of the CAP, based on decoupling subsidies from particular crops and introduced a Single Payment Scheme (SPS) for direct subsidy payments to landowners. The new scheme was intended to change the way the EU supported its farm sector by removing the link between subsidies and production. This reform focused on consumers and taxpayers, while giving farmers the freedom to produce what the market wanted. Member States had the choice to maintain a limited link between subsidies and production to avoid abandonment of particular productions. Current payments to farmers continued to reflect historic patterns of production. The SPS were subject to cross compliance conditions relating to environmental, food safety, and animal welfare standards and the need to keep land in good agricultural and environmental condition. The reforms entered into force in 2004-2005 with a transitional period delaying the reform in Member States up to 2007 and phasing in reforms up to 2012. New Member States, which joined the EU in 2004 and more recently, had the choice of whether to introduce the new scheme at once, or to phase it in over a period from 2005-2013. Decoupled payments are categorised under the so-called blue box of World Trade Organisation (WTO) negotiations, ensuring the legality and compliance with international obligations. Regarding the CAP post-2013 reform, a communication was due to be published in November 2010 after which a formal consultation was launched. During 2011, the proposal will be presented at the Council of the EU and at the European Parliament. For the first time both institutions will decide on an equal footing on the new agriculture legislative package, as defined in the Lisbon Treaty under the co-decision procedure.

The Common Market Organisation of Beef and Veal Before 1992, the Common Market Organisation (CMO) of beef and veal was founded on a system of prices guaranteed to the producers on the interior market. A strong protection of the European market with respect to the worldwide market prevailed at the borders on the basis of import and the export refunds, a mode of intervention based on public storage and direct aids to producers. The premium for maintaining suckler cattle herds was introduced in 1980 and the special premium for male cattle in 1987. The 1992 CAP reform introduced a reduction in the intervention prices of 15% over three years and gradually increased over three years the premium for maintaining suckler cattle herds. The premium was limited by a ceiling regarding the density of cows per hectare of fodder area and on the basis of a historical reference (year 1992). The special premium for male cattle was also revalorized gradually over a three year period. The reform introduced a

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

The Impact of EU Common Agricultural Policy on Beef Production: …

175

payment of this subsidy in two transactions based on the age of male cattle. For the suckler cows, the density levels were stated at a limit of 90 animals per year, age range and farm. An Extensive Complement (Extensification Payment) was introduced to grant adopting producers extensive grazing methods. As part of the package of the Agenda 2000, the proposed reform of the beef and veal market organisation regime contains a reduction in intervention prices of 20% in three stages, a removal of public storage and its replacement by a safety net fixed at a lower level and the maintenance of private storage. The direct aid for suckler cattle farmers increased 38% in three stages. The heifers were also eligible, within the limit of 20% of the number of requested premiums. The special premium for male cattle increased over the same time framework with a reduction in eligible ages. New direct aids were introduced. Among them, a slaughter premium is granted for each cow slaughtered in the EU or exported to a third country, an additional suckler cow premium for helping producers in disadvantaged areas or Member States in which the beef sector is particularly important, a deseasonalisation premium for guaranteeing market balance throughout the year and an additional payment for enabling Member States to provide support for specific production systems. Despite the progress stimulated by the measures promoting extensive production, the market organisation regime has still not been as successful as had been hoped at restraining the development of intensive production systems. Hence, the Commission's proposal was, in the latest reform of the CAP (2003), that headage payments should be decoupled and replaced with a single income support payment per farm, based on each farm's previous aid entitlement. Combined with stricter conditionality rules, including obligations regarding the upkeep of farmed land, this measure should help to curb the tendency towards intensive production and rebalance the market somewhat. Decoupling direct payments could lead to a certain drop in output as farmers increasingly switch to extensive production systems, which would cause market prices to rise and thereby improve the income of the sector's producers. A system of premiums (special, deseasonalisation and suckler cow and slaughter premiums) and extensification payments remains in force, subject to certain conditions, in the form of additional payments to the farmer.

DYNAMIC MODDELING FRAMEWORK Assumptions on the Evolution of Cattle Herd: Biological Constraints An important feature of the modelling framework is that it distinguishes between different categories of animals, namely, suckler cows, heifers, male cattle and male calves. They enter as different decision variables in the optimization problem of the cattle farmer. We assume that the farmer does not sell female calves. All female calves are grown to heifers, while male calves can be sold or grown to male cattle. There are no male animals other than male cattle and male calves. Bulls are not explicitly considered in the model, since in the beef sector nearly all male calves grow to male cattle. The capital stock in the model is given by the reproductive herd. They are animals used to provide beef supply. It consists of suckler cows and heifers that have reached the breeding age. The production of calves is assumed to be proportional to the total number of cows kept

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

176

Isabelle Piot-Lepetit

in the stock of capital, or reproductive herd. Let‘s note  the factor of proportionality. Hence, if Ct is the number of calves born at time period t, and Kt is the reproductive herd at the beginning of the same time period t, we can write:

Ct  FCt  MCt  K t for   F  M  1

(1)

where FCt  F K t and MCt  M K t represent the number of female and male calves respectively. We assume that there is no calf mortality. The simplification does not change the final results, since the mortality rate is very low and can be neglected in the maximisation of the profit function. The following constraints summarize the stock-flow relations implied by the above assumptions on cattle inventory management. The first constraint describes the evolution of the capital stock (Kt).

K t  K t 1  VKt 1   t 1

(2)

Suckler cows may be kept in the reproductive herd or sold for slaughter. The variation of the actual stock of suckler cows (Kt-Kt-1) derives from the addition of newly bred heifers or gross investment (  t 1 ) and from the sale of cows for slaughter or disinvestment in the capital stock (VKt-1). The second equation depicts the evolution of the stock of heifers (Ht).

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Ht  Ht 1  FCt 1  t 1  VHt 1

(3)

In each period, the initial stock of heifers and the age distribution of the stock are known by the farmer. Therefore, the optimal decision about heifers concerns whether to sell heifers for slaughter or to select them to enter the reproductive herd and breed. Breeding increases the stock of cows, since once they have had a calf, heifers are cows by definition. Thus, the variation of the actual stock of heifers (Ht-Ht-1) derives from the addition of newly bred female calves (FCt-1), from the selection of heifers for reproductive purposes (  t 1 ), and from the sale of heifers for slaughtering (VHt-1). Similar decisions must be taken with respect to the stock of male cattle (Bt). However, it clearly does not affect future production of calves. For male cattle, the farmer has only two choices: sale for slaughter or placement on feed for sale in the future.

Bt  Bt 1  t 1  VBt 1

(4)

Thus, the variation of the actual stock of male cattle (Bt-Bt-1) derives from the addition to

the stock of new cattle male (t 1 ) and from the sale of some of them for slaughter (VBt-1).

For male calves, the farmer can either sell them for slaughter or keep them for the male cattle herd. Thus, the allocation of produced male calves (MCt) derives from the selection of

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

177

male calves for replacement purposes in the male cattle herd (  t ) and from the sale of some of them for slaughter (VMCt).

MCt  t  VMCt

(5)

Assumptions on the Cattle Farmer‟s Behaviour The Cost Function At each period of time t, the cattle farmer carries out his production on the basis of whole facts he observes (market prices, premiums) and information he does not know yet (expected prices). The producer can decide to cut down some animals today or later on. In the case of heifers or suckler cows, his choice has a direct impact on the number of calves which could be produced in the future, and, by consequence, on the investment in the capital stock. However, the preservation of an animal for an additional time period implies a cost but can also provide a benefit related to the postponed sale if market prices increase. The cost function of the cattle farmer can be described by the following quadratic form:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

C (VKt ,VHt ,  t ,VMCt ,VBt ,t / K t , H t , Bt , t )  1 1  b1 ( K t  VKt   t ) 2  b2 ( K t  VKt ) 2 2 2 1 1 1  b3 (Ct ) 2  b4 ( H t  VHt   t  FCt ) 2  b5 ( H t  VHt   t ) 2 2 2 2 1 1  b6 ( Bt  VBt  t ) 2  b7 ( Bt  VBt ) 2 2 2

(6)

For each category of cattle, the producer supports the cost of feeding and maintaining the various animals in the herd. These costs depend on the number of animals present per category during the year t.

1 1 b1 ( Kt  VK t   t ) 2 for cows, b4 ( H t  VH t   t  FCt ) 2 for heifers, 2 2 1 1 b6 ( Bt  VBt  t ) 2 for male cattle and b3 (Ct ) 2 for calves in (6). 2 2 They are

The cost for heifers and male cattle is different. Indeed, when a heifer is kept to enter reproductive stock, it is not fed as a male. Moreover, the capacity of heifers to transform food into weight is lower. For cattle categories for which the producer has to make a choice between keeping it in the herd and selling it, there exist additional costs which are not directly observable. These costs are related to the risk taken by the producer when he decides to keep the animal. When an animal is maintained in the herd for an additional time period, it results in a cost implied by additional food as well as a probability of loss of income resulting from disease or the death of the animal. However, the principal component of this cost is usually the loss in value

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

178

Isabelle Piot-Lepetit

of an animal at the time of slaughter. As an animal becomes older, its slaughter price decreases. The productivity of an animal, the expected benefit and the production cost are 1 different by age ranges. This cost is defined as: b2 ( K t  VK t ) 2 for cows, 2

1 1 b5 ( H t  VH t   t ) 2 for heifers and b7 ( Bt  VB t ) 2 for male cattle in (6). 2 2 The Revenue Function The revenue function of the cattle farmer is defined according to the market prices at which he can sell his animals and to the instruments from the Common Agricultural Policy specified in the Common Market Organisation of beef and veal. The 1992 CAP reform maintained the premium for maintaining suckler cattle herds introduced in 1980 and the special premium for male cattle in 1987. However, the special premium is now paid twice in the life of male cattle depending on their age. The first payment is before 10 months while the second one is after 22 months. The revenue function of the cattle farmer can be written as follows:

R(VKt ,VHt ,  t ,VMCt ,VBt ,t / Kt , H t , Bt , t )  Bt pKtVKt  pHtVHt  pCtVMCt  pBtVBt  sKt Kt  sMtt  sBtt 1

(7)

where sKt Kt  sMtt  sBtt 1 is the income related to the premiums received by the farmer

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

with sKt the premium for maintaining a suckler cow herd, sMt the first special premium for male cattle and sBt the second one. The CAP 2003 reform introduced the Single Payment Scheme (SPSt) for decoupling supports to farmers from production. The revenue function becomes:

R(VKt ,VHt ,  t ,VMCt ,VBt ,t / Kt , H t , Bt , t )  pKtVKt  pHtVHt  pCtVMCt  pBtVBt  SPSt

(8)

Optimization of the Cattle Farmer’s Objective Function The objective function of the farmer is the maximization of his profit during all his working life. The producer solves the following program:

 (VKt ,VHt ,  t ,VMCt ,VBt ,t / Kt , H t , Bt , t )  maxR(VKt ,VHt ,  t ,VMCt ,VBt ,t / K t , H t , Bt , t ) (9)  C (VKt ,VHt ,  t ,VMCt ,VBt ,t / K t , H t , Bt , t )  rEt  (VKt 1 ,VHt 1 ,  t 1 ,VMCt 1 ,VBt 1 ,t 1 / Kt 1 , H t 1 , Bt 1 , t  1)

 (.,t ) is the present value of his expected profits, r is the discount rate, E is the expectation operator and  (., t  1) is the profit function for the under the constraints (1) to (5). following period (t+1).

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

179

The program (9) is solved by means of a procedure of recursive dynamic maximization, i.e. after having determined the solution for the last period of work of the producer T (beyond this period he ceases his activity to take his retirement), then one determines the solution of the previous period and so on until the period t (Howard, 1966, p. 317-320). After resolution of the program (9) starting from the definition of the cost function (6) and the revenue function (7) (1992 CAP reform), we obtain: Slaughter levels: 

for suckler cows

VK t  K t  

1 1 pKt  pHt b2 b2

for heifers

VH t  H t   t  

for male cattle

VBt  Bt 

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.



1 r b pHt   2,t 1  4 FC t b4  b5 b4  b5 b4  b5

1 1 1 r p Bt  pCt  s Mt  s Bt 1 b7 b7 b7 b7

for male calves

VMC t  MC t 

1 1 1 r 1 1 p Bt  (  ) pCt   3,t 1  (  )( s Mt  rs Bt 1 ) b7 b6 b7 b6 b6 b7

Investment rate in the cattle herd: 

in the reproductive herd

t  

1 1 1 r pKt  (  ) pHt  1,t 1 b2 b1 b2 b1

in the male cattle herd

t 

1 1 1 r 1 1 p Bt  (  ) pCt   3,t 1  (  )( s Mt  rsBt 1 ) b7 b6 b7 b6 b6 b7

Composition of the cattle herd: Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

180

Isabelle Piot-Lepetit



for suckler cows

Kt   

for heifers

Ht   

1 r p Ht 1  1,t , b1 b1

b 1 r p Ht 1   2,t  5 FC t 1 b4  b5 b4  b5 b4  b5

for male cattle

Bt  

1 r 1 pCt 1   3,t  ( s Mt 1  rsBt ) b6 b6 b6

where the Lagrange multipliers 1, t ,  2,t and  3, t are the shadow prices of an animal in the cattle stock ( 1, t for suckler cows K t ,  2,t for heifers H t and  3, t for male cattle Bt ). These shadow prices are then derived from the first-order conditions for the stock variables Kt, Ht and Bt and can be rewritten based on price and premium variables5:

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1,t   1 (sKt  pKt )   2 pHt 1   3 pHt   4 pHt 1   5 pCt 2,t  pHt 3,t  pBt where  0  b32 

4 

1  b4b5 2 r b4 F , F ,   1   0 ,  1  ,  2  0 ,  3   b1 b4  b5  b1  (b4  b5 )

 rb5F and  5  M  (b4  b5 ) 

At the optimum, the Lagrange multipliers associated with the stock-flow constraints for heifers and male cattle are equal to their corresponding slaughter prices. The expression of the shadow price for cows is more complicated, owing to the reproductive capacity of these animals. The shadow price for suckler cows is a linear combination of their slaughter value (pKt), the premium for maintaining a suckler cow herd (sKt) and their capital value in 5

Details from these calculations are not provided in the chapter but can be sent by the author on request.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

181

production, which in turn depends on the past, current and future slaughter prices of heifers (pHt-1, pHt and pHt+1, respectively) and on the current slaughter price of male calves (pCt).

Resolution of the Cattle Farmer’s Program The first conditions derived above can be solved for each endogenous variable in terms of past, current and future price levels, lagged values of the capital stock, as well as past, current and future premiums. Following Nerlove and Fornari (1998), we obtain the Expectationally Conditional Reduced Form (ECRF) of the dynamic maximisation model, which expresses endogenous variables in terms of exogenous and predetermined ones, conditional on expectations of future levels of exogenous variables. Omitting the expectations operator for simplicity, the ECRF for the optimal decision variables (VKt, VHt,  t , VMCt, VBt, t ) and for the stock variables (Kt, Ht, Bt) are the following equations: Slaughter levels: 

for suckler cows

VKt 

r 1 r 1 s Kt  ( 1  ) p Kt b1 b1 b2

(

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.



r 2 b1

r r r 1 1  ) p Ht 1  ( 3  ) p Ht  4 p Ht 1  5 pCt b1 b1 b2 b1 b1

(10)

for heifers

VH t 

b5 F b  r b 1 (r 2  1) p Ht  2  [ 5 F 3  1  4 F (r 2  1)] p Ht 1 b1 (b4  b5 ) b4  b5 b1 b1

[

b  b  r r 1 1 r 1 (1  5 F 4 )    2  (1  4 F 4 )] p Ht b4  b5 b1 b1 b2 b1 b4  b5 b1

(

r b4 F r 4 r r   3 ) p Ht 1  4 p Ht  2 b1 (b4  b5 ) b4  b5 b1 b1



rb5 F  1 b  r b  r r 1 ( p Kt 1  s Kt 1 )  [  4 F 1 ] p Kt  4 F 1 s Kt  1 ( p Kt 1  s Kt 1 ) b1 (b4  b5 ) b2 b1 (b4  b5 ) b1 (b4  b5 ) b1



rb5 F  5 rb4 F  5 r pCt 1  pCt  5 pCt 1 b1 (b4  b5 ) b1 (b4  b5 ) b1

(11)



for male cattle

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

182

Isabelle Piot-Lepetit

VBt  ( 

r 1 1 1 1 1 r r  ) p Bt  pCt 1  pCt  s Mt 1  s Mt  s Bt  s Bt 1 b6 b7 b6 b7 b6 b7 b6 b7

(12)

for male calves

VMCt  (

rM  5 1 1 1 r 1 1   ) pCt  p Bt  p Bt 1  (  )( sMt  rsBt 1 ) b1 b6 b7 b7 b6 b6 b7 

r  rM  1  r  ( p Kt  s Kt )  M (r 2  1) p Ht 1  M 3 p Ht  M 4 p Ht 1 b1 b1 b1 b1 (13)

Investment rate in the cattle herd: 

in the reproductive herd

t 



r r r r  r 1 1 1 pKt  1 ( pKt 1  sKt 1 )  (  )  2  pHt  3 pHt 1  4 pHt  2  5 pCt 1 b2 b1 b1 b2 b1  b1 b1 b1 (14)

in the male cattle herd

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

t 

1 1 1 r 1 1 p Bt  (  ) pCt  p Bt 1  (  )( s Mt  rsBt 1 ) b7 b6 b7 b6 b6 b7

(15)

Composition of the cattle herd 

for suckler cows

Kt  

r r r 1 r 1 r ( p Kt  s Kt )  (  2 ) p Ht 1  3 p Ht  4 p Ht 1  5 pCt b1 b1 b1 b1 b1 b1

(16)

for heifers

Ht 

b5 b r  b r  1 r (r 2  1) pHt  2  ( 5 F 3  1) pHt 1  (1  5 F 4 ) pHt b1 (b4  b5 ) b4  b5 b1 b4  b5 b1 

b5F r 1 b  r ( p Kt 1  s Kt 1 )  5 F 5 pCt 1 b1 (b4  b5 ) b1 (b4  b5 ) (17)



for male cattle

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

Bt  

183

1 r 1 pCt 1  p Bt  ( s Mt 1  rsBt ) b6 b6 b6

(18)

RESULTS OF THE DYNAMIC MODELLING The impact of the exogenous variables (past, observed and anticipated slaughter prices and premiums) on the endogenous variables (numbers of animals, investment rates and levels of slaughtering) derived from the model is summarized in the following tables. Table 1. Expected effects of exogenous variables on the management of female cattle Stock of cows Sales of cows Investment rate Stock of heifers Sales of heifers Ht VH t Kt VK t t Slaughter prices Suckler cows

pKt 1 pKt pKt 1

+ +

+

+

+

?

+

+

-

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Heifers

pHt 2 pHt 1 pHt pHt 1 pHt 2

?

?

?

?

+

?

?

?

+

?

?

+

+

+

?

+

+

Male calves

pCt 1 pCt pCt 1

+ +

+

+

+

-

1992 CAP premiums Premium for maintaining suckler cow herd

sKt 1 s Kt sKt 1

+ +

+ -

+

When considering the results regarding the instruments of the 1992 CAP reform and specifically, the premium for maintaining suckler cow herds, Table 1 shows a positive impact of the past value of the premium on the stock and sale of heifers. The comparison of the parameters of the exogenous variable sKt 1 in the equations (11) and (17) allows us to say that the positive impact on the stock and sale of heifers has the same magnitude. The current

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

184

Isabelle Piot-Lepetit

value of the premium has a positive impact on the stock of cows and a negative one on the sale of heifers for slaughter. The farmer increases the reproductive herd by keeping heifers. Furthermore, the expected value of the premium has a positive impact on the investment rate in the reproductive herd. An increase in the premium involves an increase in the stock of cows and a reduction in the sale of heifers for slaughter. Table 2. Expected effects of exogenous variables on the management of male cattle Stock of male cattle Bt

Sales of male cattle VBt

Investment rate t Sales of male calves

VM t

Slaughter prices Suckler cows +

pKt Heifers

?

pHt 1 pHt pHt 1

+ +

Male cattle

pBt pBt 1

+

+

+

-

+

-

-

+

Male calves

pCt 1 pCt

-

-

1992 CAP premiums Premium for maintaining suckler cow herd +

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

s Kt First payment of the special premium for male cattle + s

+

sMt

+

Mt 1

+

-

+

-

Second payment of the special premium for male cattle + + s Bt

sBt 1

+

The special premium for male cattle has an impact only on the male herd. Results from Table 2 show that both the first and second payments have an impact that is slightly different. For the first payment, only past and current premiums influence the stock of male cattle while for the second one, the current and the expected values of the premium influence the stock and flow variables. The stock of male cattle increases with the past value of the first payment and the current value of the second one. The sales of male cattle are positively influenced by the past and current values of the first payment and by the current and expected values of the second payment. The comparison of the parameters of the exogenous variables sMt 1 and s Bt in the equations (12) and (18) allows us to say that the positive impact on the stock and sale of male cattle has the same magnitude. The subsidy sMt 1 increases the size of the herd

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

The Impact of EU Common Agricultural Policy on Beef Production: …

185

because the farmer keeps male calves for renewing his male herd. At the same time, he sells

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

male cattle for which the second premium has been paid. The subsidy s Bt influences the maintenance of male cattle in the herd for receiving the second premium then they are sold for slaughtering. The sales of male calves decrease with the current value of the first payment and the expected value of the second one and, in contrast, the current value of the first premium and the expected value of the second one have a positive impact on the investment rate in the male herd. With the introduction of the SPS or Single Payment System (also called single farm payment), the 2003 reform decouples support from production, letting the main variables of herd management be influenced by market prices and providing a unique payment for stabilizing farmers‘ revenues. Results provided in Table 1 for female cattle show that the stock of cows is influenced positively by the current slaughter price of cows, heifers and male calves. The expected value of the slaughter price of heifers also has a positive impact on the capital stock while the impact of the past value of this price is undetermined. The stock of heifers depends positively on the past slaughter price of cows and calves. The current slaughter price of heifers positively influences the stock of heifers while the impact of past values of this price is undetermined. Sales of cows are influenced by the current and expected slaughter prices of cows, the expected slaughter price of heifers and the current slaughter price of male calves. Sales of heifers increase with the past value of the slaughter price of cows and the current value of this price for male calves. However, the past value of the latter price influences negatively the sales of heifers. Furthermore, sales of heifers are influenced by several expected values of slaughter prices both positively (for heifers in t+2) and negatively (for cows and male calves). The investment rate in the female herd depends only on current and expected values of slaughter prices. Table 2 shows the influence of slaughter prices on the different variables linked to the management of a male herd. The stock of male cattle is positively influenced by the current slaughter price while the impact of the past slaughter price of male calves is negative. An increase in the market price of male calves increases the sales of calves and thus decreases the number of male cattle in the herd because the farmer benefits by selling them now rather than later on. Similarly, an increase in the current market price of male cattle leads to an increase in the number of male cattle in the herd in order to benefit from higher revenues by selling more animals at a higher price. Sales of male cattle are positively influenced by the current slaughter price of cattle. The equations (12) and (18) show a positive impact that is greater on the sales than on the stock of male cattle. The sales of male cattle are also negatively influenced by past and current slaughter prices of male calves. Based on equations (12) and (18), we can say that the magnitude of the impact of the past slaughter price of male calves on the stock and sale of male cattle is the same. The impact on the sales of male calves is complex. It is influenced both by the slaughter prices of female and male cattle with a positive impact on current price for cows and male calves and current and expected prices for heifers (positively) and male cattle (negatively). An increase in the slaughter price of cows and male calves implies more cows in the herd and a higher production of male calves for slaughtering. Similarly, an increase in the current and expected prices of heifers and male cattle involves an increase in the number of heifers in the herd and thus an increase in the sales of male calves when the farmer keeps only female calves, or an increase in the number

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

186

Isabelle Piot-Lepetit

of male cattle in the herd with, by consequence, a decrease in the number of male calves sold for slaughtering. The investment rate in the male cattle herd is positively influenced by current and expected prices of male cattle and by the expected slaughter price of male calves. If expected market values for male cattle increase, the farmer can benefit by increasing his herd of male cattle and by reducing the sales of male calves.

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

CONCLUSION This chapter has provided a dynamic microeconomic model to describe the behaviour of a representative cattle farmer maximising his expected profits over an infinite time horizon. It allows us to derive a reduced form that defines each endogenous variable (sales of different cattle categories and investments in the herd) by current, past and future exogenous variables, namely, slaughter prices and headage premiums. Results from the estimation show that premiums have a positive impact on the size of the cattle herd and on the supply of beef on the market. However, impacts are different by cattle categories. After the removal of the headage premiums, endogenous or decision variables are only influenced by market prices. The model shows that changes in stock and supply of male cattle are influenced by the current price of male cattle and the past price of male calves. For the reproductive herd, expected prices play an important role in the producer‘s decision to keep or sell a cow or heifer. Thus, the evolution of prices on the market as the way cattle farmers define their expectations of the future greatly influences the production of cattle and the supply of beef on the market. For deepening this study, two extensions can be suggested. The first one is an estimation of the various parameters of the model based on observed data. This empirical development will allow an evaluation of the magnitude of the impact of each exogenous variable, namely slaughter prices and premiums, on the main decision variables linked to the management of cattle herd. The second one is an analysis of the cattle farmers‘ profiles regarding their expectation formation process of slaughter prices. This should provide additional information on beef supply response to market prices.

REFERENCES Howard R.A. (1966), Dynamic Programming, Management Science 12, 317-348. Jarvis L.S. (1974), Cattle as Capital Goods and Ranchers as Portfolio Managers: An Application to the Argentine Cattle Sector, Journal of Political Economy, 82, 489-520. Mundlak Y., Huang H. (1996), International Comparisons of Cattle Cycles, American Journal of Agricultural Economics, 78, 4, 855-868. Nerlove M., Formari I., (1998). Quasi-rational expectations, an alternative to fully rational expectations: An application to US beef cattle supply, Journal of Econometrics 83, 129161. Reutlinger S. (1966), Short-Run Beef Response, Journal of Farm Economics, 48, 4, 1, 909919. Rosen S., Murphy K.M., Scheinkman J.A. (1994), Cattle Cycles, Journal of Political Economy, 102, 3, 168-492.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

In: Agricultural Policies: New Developments Editor: Laura M. Contreras, pp. 187-199

ISBN 978-1-61209-630-8 © 2011 Nova Science Publishers, Inc.

Chapter 7

HEAR EUROPEAN UNION CITIZEN‟S OPINION ON THE COMMON AGRICULTURAL POLICY: GUIDELINES FOR POLICY MAKERS Melania Salazar-Ordóñez, Samir Sayadi and Macario Rodriguez-Entrena Dept. Agricultural Economics and Rural Sociology, Apdo. 2027 18080-Granada, Spain

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

ABSTRACT Many voices affirm the Common Agricultural Policy (CAP), the European Union‘s most important policy in budgetary terms, still does not reflect social preferences, making its legitimacy difficult. Thus, two questions emerge in relation to the CAP: Do EU citizens hold such a negative view of this policy? Can this view affect the existing Euroscepticism? To reply to these questions, this paper seeks to implement appropriate analytical measures to analyse social opinion and interest of the CAP, conducting an empirical application in southern Spain. Therefore, a survey has been designed and an ordinal logit as well as a bivariate probit model were estimated, plus a cluster analysis. We conclude citizens have limited knowledge of the CAP and they are critics ofit, so its legitimization is subordinate to enhance information and confer greater simplification and transparency to this policy.

Keywords: Common Agricultural Policy (CAP); Citizens´ knowledge of the CAP; CAP budget; Southern Spain.



E-mail: [email protected], Telf: +34 957222100, Fax: +34 957222182.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

188

Melania Salazar-Ordóñez, Samir Sayadi and Macario Rodríguez-Entrena

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

1. INTRODUCTION The policy makers of the European Union (EU) recognize that public policies cannot be sustained without citizen assent. The relevance recognized to citizens is unquestionable. This relevance comes largely from two facts: the precept that any economic policies have to improve the welfare of the citizens (European Commission, 2003); and the lacks of a democratic decision making process at a community level, suffering the so-called democratic deficit (Schmitter, 2007). Therefore, the legitimization of the political intervention turns into a very difficult process1. The Common Agricultural Policy (CAP) is comprised of a complex institutional structure with numerous consequences (Runge and von Witzke, 1987). It directly affects the EU society‘s welfare by means of the agri-food sector. In this sense, the CAP is not an exception to the above-mentioned determinants, particularly if we take into account the financial resources absorbed by it (32% of the EU total budget in 2013). However, the CAP has become a political weakness inside and outside the EU; a point of social dispute which has engendered many problems (surpluses, financial excesses, environmental pollution, food crisis, etc.), aggravated by the sweeping transformations undergone by society. As a result, the CAP has been progressively changed by five reforms: Reform of 1988, Reform of 1992, Agenda 2000, Mid-Term Review of 2003, and Health-Check of 2008. By means of these reforms, the CAP has incorporated environmental and rural development aspects, implementing decoupling aid and shedding its production-oriented nature. Nevertheless, diverse opinions (Potter and Burney, 2002; Hall et al., 2004; Hyytiä and Kola, 2005; Cooper et al., 2007; among others) have contended that the Common Agricultural Policy (CAP) continues to fail in responding adequately to the changes in social priorities, preferences and values regarding agriculture. Thus, two questions emerge in relation to the CAP: do EU citizens hold such a negative view of this policy? Can this view affect the existing Euro-scepticism? To reply to these questions, two aims are proposed: 1) to determine the knowledge and general interest of citizens regarding the CAP; and 2) to analyse social perception concerning the budget of this policy, identifying citizens´ typologies; by means of conducting an empirical application in southern Spain. The paper is structured as follows. The next Section summarizes the role-plays by social changes as inducted factor in the CAP Reforms. Later, after presenting the sample data and research method, Section 4 examines the citizens´ knowledge regarding the CAP and the importance that citizens attach to being informed about this policy. Section 5 deals with the social perception of the agricultural budget as well as the characteristics that determine the citizens´ opinions. The final Section offers some recommendations to legitimize the future of the CAP.

2. THE ROLE OF SOCIAL CHANGES IN THE CAP REFORMS The EU decision makers designed the CAP from a neoclassical approach, based on the development of the agricultural sector with improved technology and the accumulation of 1

The term ―legitimacy‖ was introduced into political science by Max Weber (1864-1920). The term refers to reasons for the citizenry to obey the power structure so that a State is legitimate if there is a consensus among the citizens to accept that authority. The process by which a person gains legitimacy is called ―legitimization‖.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Hear European Union Citizen‘s Opinion on the Common Agricultural Policy

189

capital in order to boost productivity. However, poor policy foresight caused many undesirable effects, which persist in a recursive way among the most important factors, which have provoked the Reforms of this policy. By means of these Reforms, the CAP regulatory measures have been significantly modified; the Agenda 2000 introduced the food quality and safety, the rural development, and the environmental protection as new objectives of EU agriculture. Social changes have been one of the main inducted factors of the CAP Reforms. The citizens‘ viewpoint on agriculture has significantly transformed overtime. Earlier, farming was viewed as a cultural and an environmental guarantee, and the farmer was a link to the land and tradition. In the last few decades agriculture is viewed as a source of pollution and farmers as businessmen. At the same time, the swift changes prompted by economic development and the higher levels of well-being have fostered what sociologists call post-materialistic values2, particularly in the new generations that have been educated in a middle-high standard of living. The post-materialist dimension, once physical and economic security is reached, emphasizes quality of life, equality, solidarity, and a greater willingness to participate in decisions concerning work, community, politics, etc. These principles have stimulated interest in such matters as food quality, environment and rural development (European Commission, 2008). Jointly, consumers and taxpayers have become active and legitimate agents to express opinions and to demand their preferences in European agriculture. This social shift can be split into four fundamental subjects where the CAP has notable effects on their well-being: food quality, environment, rural setting and budget. The structure of consumption has been modified to demand quality products due to health consciousness, greater interest in physical appearance and the consumption of natural products. In addition, with the different food crises that have stricken Europe (mad-cow disease, foot-and-mouth disease, bird flu, etc.) the confidence by consumers has decreased. The CAP has turned food quality, safety and health into a priority, giving higher importance to systems of quality control, traceability, denominations of origin, etc. The relations between agriculture and the environment have also become a matter of general interest. At first, the CAP did not deal with environmental issues, but since the 1992 Reform when the first agro-environmental measures were introduced, the CAP has tried to respond to the higher demand for environmental protection. For this, measures such as conditionality have been developed in an attempt to include environmental protection as an argument to justify to the general citizenry the financial agricultural support. Parallel to the new environmental request, new social demands have arisen regarding rural areas both for their conservation as historical heritage and for leisure. In the CAP the maintenance of rural areas has gained importance, and new measures have been incorporated until the establishment of a specific policy, the Rural-Development Policy, and a fund to finance it, the European Agricultural Fund for Rural Development (EAFRD). Although the budget addressed to rural development continues to be reduced compared with the agricultural one (in 2009, 9% of the European total budget, in 2013 will be 9.7%), the development of this policy changes the relations between farmers-environment and it pursues the satisfaction of social demands (European Commission, 2008). 2

The term ―post-materialistic‖ emerged from Inglehart in 1971 in his work ―The Silent Revolution in Europe: Intergenerational Change in Post-Industrial Societies‖.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

190

Melania Salazar-Ordóñez, Samir Sayadi and Macario Rodríguez-Entrena

Finally, the EU citizenry have renewed their demands related to the high budget for agriculture. Since 1992 Reform part of the financial burden was shifted from the consumer onto the taxpayer by introducing direct payments, but the budget continued to rise. Lately, the financial discipline was developed to keep CAP spending beneath budgetary ceilings. Nevertheless, in 2009 the agricultural budget was 34% of the European total one and in 2013 it will be 30%, approximately. This high agricultural budget stresses the demand from consumers and taxpayers of those measures which represent the most efficient way to assign public expenditure; and there is little evidence that they are warned or informed about the opportunity and dead weight costs that the CAP represents for the lower supply of other public and private goods and services (Marsh and Tarditi, 2003).

3. CASE STUDY AND QUESTIONNAIRE DESIGN

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

3.1. Case Study The empirical application has been developed in Andalusia (southern Spain), which covers 87,581 sq km and has roughly eight million inhabitants (INE-Spanish Statistical Institute, 2008). It is administratively organized into eight provinces. Some 28% of the population is located in towns with fewer than 20,000 inhabitants, 34% in medium-sized cities (20,000 - 100,000 inhabitants), and 38% in big cities (more than 100,000 inhabitants). The farming sector has gradually lost relative weight but its figures are significantly higher than in Spain as a whole. This sector contributed, in 2007, 4.4% to Andalusian Gross Domestic Product at current prices and represented 7.7% of its employment. The region also has 18% (4.5 million hectares) of the national usable arable area (UAA) and 2.6% of the UAA of the EU. Agricultural activity is, in short, the main activity in this territory, representing some 55% of the region. In Spain, this percentage is similar with a UAA of roughly 50% of the territory, this figure falling in the EU to 39%. The final agricultural output is 10,388 million euro (25.5% with respect to the entire country). The most important crops, in percentages of overall farm yield, are vegetables (35.6%) and the olive orchards (33.1%).

3.2. Questionnaire Design Face-to-face interviews were conducted with 4093Andalusian citizens (+18 years). Table 1 presents sample data. The sampling followed a random stratified proportional methodology, using the population distribution (INE- Spanish Statistical Institute, 2007). Population density was used as the correction factor, delimiting the rural municipalities with a density of less than 150 people/km2 (OCDE, 1994).The surveys were carried out between April and July 2007.

3

Sampling error = 5%; Confidence Interval = 95%.

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

Hear European Union Citizen‘s Opinion on the Common Agricultural Policy

191

Table 1. Characteristics of Respondents Characteristics Gender Age

Studies

Household income

Occupation

Copyright © 2011. Nova Science Publishers, Incorporated. All rights reserved.

Place of residence

Female 18 years-34 years 35 years-49 years 50 years-64 years ≥ 65 years No studies Primary studies Secondary studies University studies 3000 euro Employee Self-employed worker Unemployment Retired Student Homemaker Rural inhabitant Urban inhabitant Metropolitan inhabitant

Sample Data (%) 52 37 31 19 13 6.3 25.2 29.3 39.2 22 39 24 15 51 12 5.5 11 8 12.5 26 35 39

4. RESEARCH METHOD A censured or sampling selection bivariate probit model was estimated (as in Meng and

Schmidt, 1985) assumed E 1   E 2   0 , Var 1   Var 2   1, Cov 1 ,2    ; where perturbations 1 ,2  follow normal standard independent distributions (Greene, 2006). That is, y is not observed unless y2 = 1 . In this study, an analysis was simultaneously made of whether the respondent had heard of the CAP and the level of the respondent‘s knowledge of the CAP. Thus the dependent variables appeared censured, since the first equation (knowledge) is known only for those polled that had heard of the CAP (y1 is observed when y2 = 1). In this case, bias was avoided by estimating both equations jointly. Thus, y1= 1 when knowledge was medium to high, so that y* > 2 of the Likert scale used for quantification, or 0 in the opposite case. Meanwhile, y2= 1 when the respondent had heard of the CAP, and thus y* > 0. Therefore, we test: P(y1= 1, y2= 1); P(y1= 0, y2= 1); P( y2= 0). Later, an ordinate logistic model (estimated by the maximum-likelihood method) was used to analyse citizens´ importance to being informed about CAP. Thus, three values were adopted by the dependent variable (y): y = 0 when the importance is low, so that y* ≤ 0, value

Agricultural Policies: New Developments : New Developments, Nova Science Publishers, Incorporated, 2011. ProQuest Ebook Central,

192

Melania Salazar-Ordóñez, Samir Sayadi and Macario Rodríguez-Entrena

1 and 2 of the Likert scale used for quantification; y = 1 when importance is medium, so that 0