The farmer and the money economy: The role of the private sector in the agricultural development of LDCs

Abstract

The world's food/people balance is precarious now and will become more precarious in the future, in terms of both supply and price. The grain producing industrial countries have come close to reaching their production potential. The solution lies in exploiting the production capacity of the developing world. At present only half of the world's good arable land is being farmed. Most of the other half does not have the necessary infrastructure, and opening it up to cultivation will require major capital investment. This means that a serious political commitment is required, primarily by LDC governments. There are concomitants for aid policies as well. The key action-oriented question is where, and how, productivity increase can take place. The authors suggest that the most effective method requires involvement of the private sector, specifically the participation of small landholders, working 1–5 acres, grouped around a corporate core. The corporate core provides technical, educational, and financial inputs, processes, and/or markets the output. In a widening circle of socioeconomic benefits, as small holder productivity increases, work can be offered to landless peasants, and both the farmer and the peasant are brought into the money economy with the overall developmental dynamic this implies. Most effective is a holistic approach involving all segments of the rural community, particularly women. This paper will offer empirical data from case histories in developing countries and will derive from this data (and the extensive exposure of the coauthors to the problems and opportunities of agribusiness worldwide) policy implications for the public sector and strategy implications for the private sector. In planning the transition to sustainable societies, the concept of “triage” is ethically repugnant, politically explosive, and economically devastating. An effective approach to the problem of agriculture would eliminate the current de facto triage, where food/people imbalance leads to the death of hundreds of millions through starvation and malnutrition.