This article appeared originally in Gulf News: link to original article
To know what food commodities a country is good at producing, look at its farmers.
Agriculture has a memory of its own when it comes to the cultivation of food commodities. Farmers, when left to their own devises, are more adept at cultivating commodities that safeguard their access to food and protect livelihoods. Historically, this resulted in the accumulation of agricultural knowhow and an underlying understanding of comparative advantage.
Unlike farmers, governments are more interested in cultivating commodities that they consider important to their food security and being self-sufficient in them. Based on that, they deploy protectionist measures, such as tariffs on food imports, and introduce subsidies to drive farmers from what they have always been good at producing to what governments want them to produce.
Undercuts legacy knowhow
This drive by governments does not only impede farmers’ knowhow but undermines the decades’ old comparative advantage too.
Governments’ drive to be self-sufficient is as old as time, and so is the search for land that is agriculturally more productive. This, for instance, has been a key driver behind the Mongol Empire’s ventures into foreign lands.
The same has been observed during the Khediviate time in Egypt and Sudan. Actually, the Khedive realised that Egypt’s lands will not be enough to feed Egypt’s burgeoning population, and that productive Sudanese lands could be utilised and cultivated to make food security ends meet.
Culture of protectionism
To achieve self-sufficiency, even if only half successfully, countries resort to protectionist measures that would help them in implementing their self-sufficiency policies. Most of those are enacted behind a façade of protection for farmers and their livelihoods.
The fact is that such protection takes the form of tariffs on the imports of food commodities that countries want to grow domestically, as well as agricultural and other subsidies to promote the cultivation of the same.
Protectionist measures also include buying farmers’ produce at fixed prices. That is done safeguarding them from international price fluctuations for the commodity that they cultivate, like the case is with rice in Thailand. Another is what India did last year, prior to its recent agriculture-related reforms, when a ban on onion exports was aimed at securing domestically produced onions for local consumption.
This made sure that higher international onion prices did not trickle down to domestic markets.
In all cases, these measures, along with others, have been planned and carried out under the premise of reaching self-sufficiency for the betterment of the population, accomplished by producing food needs within the country’s borders. Thus, domestic food prices are kept under control by curbing exposure to international price fluctuations.
Realistically, though, protectionist and other measures to skew the food production map in one country’s favour versus another can be quite disruptive to the natural, and sometimes implicit, comparative advantage that a country possesses. The encouragement to grow certain commodities, but not others, push farmers to grow what the country is willing to support in order to not lose their livelihoods. Even if that means abandoning decades old knowhow of what they are good at producing.
Theirs to lose
As this goes on, what could have always been a country’s comparative advantage may be lost for good as farmers move away from it to accommodate a country’s self-sufficiency aspirations in a food trade market that is more globalised than ever. The longer this goes on, the further countries move away from their historic comparative advantage to one that they can only retain via protectionist measures and costly subsidies.
The only way for countries to not lose historic comparative advantage for good is by looking inwards when assessing what commodities their farmers have always been good at producing, without protection. Start from there to specialise in those commodities again.
Whereas this cannot be done without risks in a globalised food market, the move away from all-out self-sufficiency to one that is based on historic comparative advantage, driven by what farmers have always known can be grown productively in the land, is the way forward.
This, nevertheless, can only be sustainable if more countries come to terms with its importance for a more sustainable domestic food security and an enhanced global one in the future. Such inclusive food security, for farmers and countries, can only be arrived at when farmers specialise and countries trade.
The last thought that I want to leave you with: can quantitative analysis unearth historic comparative advantage?