Where Today’s Agricultural Crisis Fits Into The Arc Of Economic History

-OpEd-

PARIS — In the 8th century B.C., the Greek poet Hesiod published Works and Days, a poem that is considered to be the first economic text in history and which contains the passage: “work, high-born Perses, that Hunger may hate you, and venerable Demeter richly crowned may love you and fill your barn with food; for Hunger is altogether a meet comrade for the sluggard.”

While Hesiod advocates work, it is because, thanks to the clemency of Demeter, goddess of agriculture, it increases production and wards off famine.

The challenge for a peasant in antiquity — and humanity’s challenge for centuries — was to produce enough food to feed his loved ones. Until the mid-18th century, life was punctuated by scarcity and famine. For Angus Deaton, winner of the 2015 Nobel Prize in economics, society was stuck in a “nutritional trap.”

Before 1760, any increase in population — which one might think would promote growth by increasing the labor supply — actually led to food shortages. After 1760, thanks to the industrial revolution, which was also agricultural, humanity emerged from this “nutritional trap.”

As famine recedes, rural population declines

Each new human is no longer primarily an additional mouth to feed, but rather a head capable of better understanding nature and mastering it, or skillful hands able to extract more resources from it. Yet hunger has certainly not been completely eradicated since then.

According to the UN Food and Agriculture Organization (FAO), 800 million humans still suffer from limited access to food; nevertheless, 9 million people died of hunger in 2023, or 0.11% of the global population.

This relative but real success in improving the situation has been achieved while the share of the rural population is declining. In 2010, for the first time in history, this share fell below 50%, according to the World Bank.

A phenomenon of overproduction has emerged.

In 2023, it reached 43%, with an obvious contrast between countries where the rural exodus is at its beginning, such as Niger (83% rural), and those where it is coming to an end, such as Belgium (2% rural). The world has seen spectacular growth in agricultural productivity, allowing it to escape the nutritional trap.

But recently, a phenomenon of overproduction has emerged, the immediate consequence of which is ever-increasing pressure on prices. As a result, farmers from Brussels to New Delhi are denouncing a new trap that concerns them directly. The stagnation of their selling prices due to saturated demand, mostly in developed countries, is coming up against their rising production costs.

To escape this “income trap,” they’re asking public authorities to fix remunerative agricultural prices. But it is easy to understand that this would lead to a reduction in the population’s purchasing power and risk reviving the nutritional trap.

O Demeter, where art thou?

Furthermore, just after managing to “escape” — as Deaton puts it — from this nutritional trap, humanity has fallen into another: the “ecological trap.” The danger looming over it is less and less linked to Demeter’s avarice and hostility but to her disappearance.

Rather than debate prices, governments and agricultural unions should be focusing on how to “escape” simultaneously from the nutritional, income and ecological traps.

Some answers can be found in the works on agriculture of Theodore Schultz, winner of the 1979 Nobel Prize in economics. He believes that government intervention, which has always been involved in agricultural problems, must evolve.

In his view, prices must be set in a market open to both national and international competition, so that consumers are not prevented from feeding themselves properly. Yet we must consider that, farmers — through their presence on the ground and their privileged relationship with nature — provide considerable services to society.

Any action by farmers in favor of the environment should be remunerated.

To use the economic vocabulary, any action by farmers in favor of the environment constitutes a positive externality capable of resolving the problem of the ecological trap. It should therefore be remunerated.

Overwhelmed by dairy surpluses in the 1970s, Europe started rethinking its CAP (Common Agricultural Policy) to move in this direction. From the so-called Mac Sharry reforms, named after the European commissioner for agriculture in the 1990s, to the recent adoption of the “F2F” (Farm to Fork) strategy, Europe has subsidized its farmers to produce less but better.

And Europe is not alone in doing so: the FAO estimated global public subsidies to agriculture at 0 billion in 2021. Yet the organization underlined that “87% of this support, approximately 0 billion, is price distorting and environmentally and socially harmful.”

According to the FAO, .76 trillion in subsidies should go to global agriculture in 2030. But such spending must be based on “the repurposing of agricultural support to redirect production toward healthier, more sustainable, equitable and efficient agri-food systems, in particular by rewarding good practices such as sustainable agriculture and climate-smart approaches.”

To overcome the agricultural crisis, everyone must therefore accept the changing role of farmers in light of ecological challenges.