Can an agricultural based economy survive in capitalist markets?

Seeing the millions of acres of land as the plane descents into the Khartoum capital it is difficult not notice the gigantic areas of perfectly aligned fields of various colours and shapes surrounding the tributaries of the river Nile.

A fertile lands of Sudan have provided the rest of the Middle-Eastern countries with supplies of grain, wheat, rice, corn, starch, Arabic gum and about every type of maze available. Large swaths of fertile land, in which rains are abundant during the monsoon season and the sun is forever exposed for the rest of the year creates lush grounds for the cultivation of agricultural produce and grazing of of healthy cattle, sheep, goats and wonderous other beasts.

On closer observation one can spot the circular type of green fields arranged in groups surrounding  a boundary of desert, a phenomenal scene that looks something out a sci-fi movie. This is the new type of cultivation in which fields are not adjacent to the meandering Nile for irrigation, instead water is pumped from underground wells using diesel fuel generators and then distributed along wheeled pipelines that stretch over a kilometre in length operating in circular motion to irrigate the field giving it the alien crop circle affect when viewed from above.

The irrigation process requires no manpower, it works automatically once a day and is powered using generators. The seeding and the harvesting process is carried out by a one to two farmers and an industrial combine harvester and tractor.

For the most productive and successful farmers, the harvest is collected, compacted and transported to the nearest sea port for overseas markets as the rates offered overseas for the tonne of produce is much better than local one.

Furthermore the requirement to employ farmers, peasants and trade-middle men is reduced if not eliminated. The heavy machinery and digitalised market place are faster, more accurate and easier to work with than the use of human and animals.

This whirl wind in technology has improved farming in terms of harvests quality and quantity but to the determent of the employment figures, and local incomes.

Capitalism at its core is the process of gathering resources to create machines that can create items for the betterment of human quality of life.

Depending of the different properties of the final product the gathering of the right mix of resources is necessary for the construction of final product.

Resources such as oil, rare earths and minerals in which extraction, refining, selling and taxing offers much better returns than agricultural produce and has a greater effect on stimulating economy.

Agricultural commodities in comparison are sold for a much lower price and with the globalisation of capitalism, privatisation of land to gain investment for new machinery, tractors, harvesters, generators becomes a much better option to adopt financially.

The drawback is that better productivity is reflected in terms of profits for a private company rather than a national or government body.

The purchase of private lands at the hands of gulf states has a rich history in Sudan from the 1980’s, however this has developed considerably with the increase in population of the Gulf states and the rise in demand for livestock and agricultural products through private entities since 2011.

So how can the comparatively low price and employment required on the farm be offset in capitalist markets in which survival depends solely on the yields / km2.  In other words, how can an agricultural economy compete with an industrial economy if the farms business model is simply to yield and harvest crops at the lowest cost with the highest quantity.

Although a very prickly subject, there are simple solutions that can offset the in balance of a lack of employment, national income, and generally gross domestic product.

Creating smaller farms : economies of scale, creating more for less is a natural result of technological advancement and has created large-scale enterprises. Reducing them in size to create small holder farms can have a positive impact.

 

1. Creating small holder farms are often capable of making better use of land and other resources, better adapting to market needs and changes in demand, delivering crops to the marker more cheaply, than having large landowners.

This will depend on the nature of the crops grown, on the availability and costs of means of production, including land, livestock and labour, on access to transport and markets, and on the levels and volatility of the prices for which crops can be sold. The most distinctive advantage of large landowners has been their ability to secure privileged access to markets and protection and subsidies from governments, and credit from banks, usually on more favourable terms than have generally been available to smallholders. Thus progress in agriculture has often followed the breaking up of large estates, and sometimes a transition from more capitalist relations of production to peasant or peasant or family forms of farming.

 

2. Increasing Manufacturing Capacity to diversify products

Without manufacturing capacity, beyond exporting of goods there is limited other economic activity.

The post harvest the model of export of just raw materials limits employment and income. Providing nations with manufacturing technology to create products from the harvest such as ketchup, mayonnaise, jam, tea and other products that can hold shelf life will create a market beyond the export of raw materials.

The manufacturing , i.e. the creation of another product from the base raw material into something that tastes good, is packaged to a good quality standard and can be marketed to local and international markets can add an extra layer of economic activity for the producers.

Investment into quality hygienic manufacturing process, packaging and labelling will enable agricultural producers to balance out the limited nature of exporting raw materials and increase employment opportunities for local populace.

 

3. Use of Data from consumer nationsLand share ownership – instead of foreign investors owning all property rights governing the type of produce and quantity, they can be contracted in shared agreement in which foreign investors agree with locals into the type of crop, the quantity, and include the procurement of local capacity into the supply chain.

The types of fertilisers, the organic materials used to reduce pesticides and chemical compounds can also be arranged through the use of a local supply chain.

Diversifying the type of crops produced based on both international and local demand and splitting the export in accordance to the need of both entities is a dream that was very difficult to establish especially as the times for harvest can take 6 months or more. With the use of integrated data platforms that can assess the consumer consumption rates, storage levels and accurately estimate future demand the market demand can be assessed more accurately.

Using live data from consumers will provide for a more accurate supply-demand curve, allowing for just in time production, reducing risk/scarcity and volatility from other producers in the market place. Thus in turn, reducing hoarding and throwing out of tonnes excess supplies – a regular practice used to stabilise prices.

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