Market failure

by Jeremy Cherfas on March 26, 2013

Edward Carr’s continuing series on Doing Food Security Differently comes to a real fork in the road. Over and over again, one hears economists say that we have to connect poor farmers to markets, that’s the only way they’ll ever make it out of poverty. Carr points out that

[S]implifying one’s farm to focus on only a few key crops for which there is “comparative advantage”, and then using the proceeds to buy food, clothing, shelter and other necessities, works great when the market for those crops is strong. But what happens when the food you need to buy becomes more dear than the crops you are growing, for example through food price spikes or a shift in markets that leave one’s farm worth only a fraction of what is needed to feed and clothe one’s family?

To which I would add that even without price spikes or a shift in markets, the cash you earn might not be enough to buy back the nutrition you lose by focusing on a few key crops.

Carr’s main point is that the governments under which poor farmers labour are generally unlikely to be able to step in with safety nets when farmers need them. Not that safety nets are the answer, but in changing traditional cropping patterns, you also change traditional safety nets.

If, in coastal Ghana, you are growing maize and cassava as your principal crops, you can sell both in years where the market is good, and you can eat both in years where the market turns on you. I have referred to opting out of markets as temporary deglobalization, where people opt in and out of markets as they gauge their risks and opportunities.

Forcing farmers away from this model … removes the option of turning away from markets and eating the crops in conditions of years where the markets are not favorable. This is even more true when some of that newly reduced crop mix only takes value from sale on global markets (i.e. cocoa) and/or which cannot be eaten (i.e. cotton).

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