ILEIA Newsletter • 11 nº 4 • December 1995

Economics of the entire farming system

Anura Widanapathirana

I read with interest the article "Economic Evaluation of LEISA" by Ruben and Heerink in ILEIA Newsletter Vol 11/No 2. The article attempts to compare, contrast and quantify costs and benefits of High External Input Agriculture (HEIA) with that of Organic Agriculture (OA) and Traditional Agriculture (TA). The article is thought provoking and interesting. However, I have several concerns with regard to the methodology of evaluation adopted.

My first concern is that the production benefits and costs are evaluated considering only one crop, i.e. banana. But the reality is that there is a mixture of crops and several livestock types in any given area from which the farmers would benefit. It is immaterial whether any single crop or livestock type leads to a higher output, income or lower cost; what is more important is the total of profit and loss from the entire farming system. The orientation to concentrate on segments of the farming system is a result of the emphasis of modern agriculture which essentially looks at 1-2 crops or livestock types whereas the traditional agriculture was concerned with the net gains and losses of the entire system.

Second, in comparing costs and benefits attributable to TA, it is important to characterise traditional agriculture. The commonly accepted definition of TA is agriculture using traditional practices (such as organic manuring), inputs (such as indigenous seeds) and processes (such as local leadership patterns, local customs and rituals, etc).

Therefore, it may be realised that OA is, in fact, a part of TA. In addition to organic practices, several important social institutions are involved. If TA is defined as above, there should be a higher level of production, due to the use of socially accepted methods of crop production. Table 1 in the article indicates that the yields are lowest in the case of TA. The reason for this confusion has to be explained.

Third, the results of economic indicators may be different if a farming system approach is used in the evaluation. For instance, labour productivity (as measured by kg per manday for a specific crop) is high in HEIA compared to AO or TA. However, if labour productivity of the entire farming system is assessed, it is likely to be low in HEIA, because of the environmental and externality problems associated with the use of chemical fertilisers, pesticides, tractor power, etc. Water quality is deteriorating, predators of insects and parasites get lost, fish and aquatic life is dying, honey bees disappear leading to low level of crop pollination.

As a result, production of fish, aquatic system, bees, honey and others will be low. Moreover, pesticide poisoning of humans will be high leading to a variety of health impacts and inproductivity. It is a misnomer to say that there is high labour inputs for weeding in TA. It will in fact be less due to the use of a combination of methods and activities adopted in the case of TA.

Fourth, table 1 of the article gives data for only one single season. Aren’t we interested in the cumulative effects of TA and OA over several seasons? One of the significant features of OA and TA is that crop yields will be sustained over a longer period of time. Manures and other organic materials will have a cumulative effect on soil fertility. Although production in OA and TA is less in the initial year, it will be higher later on.

The sustained level of yield from farm yard manure and the dropping yield trend curve for mineral fertilisers is graphically shown in the article by Nagendra Rao (ILEIA Newsletter Vol 9/No 4, 1993). Rao has used data for 14 continuous years. Still another related issue is the level of yield for organically manured vis-à-vis chemical fertilised plots. Perumal (ILEIA Newsletter Vol 9/No 2, 1993) shows a higher cost-benefit ratio for organically manured crops compared to that of Urea. Banmeke (same ILEIA Newsletter) describes an experiment of five years, showing that continuously adding mineral fertilisers to maize plots has resulted in a soil no longer fit for arable cropping anymore.

Fifth, with regard to the production function (figure 1) given in the article, let me point our that both curves are based on a single crop. The output from the entire system will be low due to externalities associated with high-tech agriculture. However, in actual practice, I am yet to see a production function developed for a farming system.

Sixth, the article says that at relatively high output and low external input prices, HEIA tends to offer better economic prospects. This is an incorrect statement. Such a technique will offer better financial prospects and NOT necessarily economic prospects. Economic prospects should consider externalities and assess costs and benefits to the society. If HEIA is evaluated in economic terms, then the economic returns to the society will likely be low.

Seventh, although OA and probably TA require more labour, there will be a range of benefits on the society at large. This itself make it the duty of the government to support this form of agriculture. Finally, by way of a suggestion, let me point out that another way of promoting OA/TA techniques is to offer incentives. In our country, HEIA receives at least 20 different types of incentives, ranging from direct financial subsidies to better access to knowledge in the form of leaflets and propaganda work, mass media, printed media and attractive sign boards.

Organic manures are provided with just 2 incentives only! If profits to the society are considered, it will be less advantageous to spend a country's resources on chemical fertilisers. Promotion campaigns to educate consumers on the virtues of organically grown food will create more demand and push the price up. This will definitely have an effect on increased production. However, these arguments should be assessed and quantified through further research. As economics is concerned with the entire society, let us put our thoughts to assess and quantify changes in the entire farming system. I would be very happy to hear from ILEIA members on this.

Anura S. Widanapathirana (socio-economist), 59, Galle Road, Colombo 4, Sri Lanka