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Arguments - Intervention Costs |
| Agricultural Policy |
From time to time
it seems necessary to remind ourselves that nothing can be more costly than a wrong
policy. In the 20th century alone, hundreds of millions of people have been killed in
wars, have been victims of genocide, have been murdered in concentration camps, have died
in man-made famine, or have died prematurely because of poverty and untreated illness. No natural
catastrophe in recent history comes close to the death toll of wrong political decisions,
unrealistic political programs, and hate-based ideologies. Two world wars, numerous
regional conflicts with millions of casualties, a few dozen deadly famines triggered by
policy failure, and the ongoing economic development disaster in some parts of the world
can all ultimately be traced back to faulty political decisions and ideologies - usually
made or promoted by a ruling "elite." China has had its share of policy-made
disasters, from the the "Great Leap Forward" to the "Cultural
Revolution."
On a smaller scale, we can also say that a wrong agricultural policy can be more
devastating than any hardship imposed on the farmers by Nature. The big agricultural
disasters in our century have usually been caused by unrealistic policies based on utopian
ideologies, such as the consistently disastrous consequences of collective
farming in regions as diverse as Russia, Mozambique, Cuba, Cambodia, and China. On the
other hand, there is clear evidence that a relatively small set of low-cost
policies can almost immediately trigger agricultural growth. The following are a few
low-cost policy measures that could be implemented to further improve China's agriculture: |
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The privatization
of agricultural land would certainly strengthen sustainable forms of agriculture. If
farmers owned their land and could pass it on to their children, they would make more
long-term investments in soil quality, irrigation systems, or the physical
characteristics of their fields (terracing, removal of stones, leveling). |
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A market
for agricultural land would eventually solve the structural problems of China's
small-scale farms. A free land market would facilitate the efficient allocation of this
very scarce resource. In the long run, only the concentration of cultivated land in a smaller
number of farms that are economically viable will increase productivity. Of course, a
market-oriented land policy in China would have to include checks to prevent some of the
expected negative side effects. First, there would have to be restrictions to prevent the
sale of agricultural land for nonagricultural purposes. Second, free land markets
could be only introduced in those regions where rural industries have created
nonagricultural job alternatives for the farmers. |
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A price-based system
of water allocation could help to reduce waste and accelerate the development of more
efficient (irrigation) infrastructure. Here again, only a gradual introduction of price
elements within certain sectors would be possible. It also would make sense to separate
markets for urban, industrial, and agricultural water withdrawal; otherwise, the
agricultural sector might have no chance to compete with capital-rich industrial and urban
users. |
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Investment in education,
training, and research is usually one of the most
cost-efficient policy measures, because it has numerous positive side effects and
its impact is long term. The Chinese government recognized this opportunity some time ago,
and has invested heavily in basic agricultural and bio-technology research.
However, training of farmers in modern agricultural technology and management, especially
in more remote areas, could certainly be improved. Even more important would be additional
opportunities for technical and business-oriented training in rural areas to prepare the
sons and daughters of millions of small farmers for new jobs outside the agricultural
sector. |
| Of course,
all these measures have costs that can and should be calculated in detail. However,
experience from other developed countries suggests that the benefits of these measures
would certainly outweigh the costs. |
| Related Arguments |
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Agricultural Policy: Trends
Impact Data Quality
Prediction Error Intervention
Possibilities Intervention
Costs
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Revision 2.0 (First revision published in 1999)
- Copyright © 2011 by Gerhard K. Heilig. All rights reserved. (First revision: Copyright © 1999 by IIASA.) |
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