Agribusiness Upstream from the Third World Farm
Multinationals are the chief agents of penetration of Third World food systems, but they are frequently dependent on the prior efforts of center governments or of the international development agencies for providing infrastructure and employable personnel. The World Bank and the several UN specialized agencies have been instrumental in creating many of these indispensable underpinnings of industry— like electricity and adequate transportation—while agencies like USAID have concentrated on training personnel that will be receptive to a particular sort of food system. Between 1950 and 1969, USAID trained 43,000 foreigners in agricultural sciences in the United States; this figure does not include all those persons trained abroad by Americans in the field.30
The major foundations also play an important role. Foundations are in a unique position because they are accountable to no constituency (except a hand-picked board). Unlike corporations, they are under no pressure to obtain immediately profitable results and can thus indulge in long-term planning. Authorities of the underdeveloped countries in which they operate generally perceive them as being at best benevolent, at worst neutral; but rarely as adjuncts of American commercial or political policy. Foundations may thus have access to persons and places the government and the corporations cannot reach. This was certainly true of the Rockefeller and Ford Foundations in India during the early 1950s when State relations were cool. Or, as the Vice President of the Rockefeller Foundation explained to a Congressional committee, The International Rice Research Institute in the Philippines (funded by Ford and Rockefeller, an architect of the Green Revolution in Asia) "because its scientists are independent" has access to countries as impenetrable as Burma.31
If the package of new agricultural techniques that together make up an unfamiliar agricultural model are to be transferred successfully, there must be agents willing to undertake the unprofitable aspects and wait out the initial acceptance period so that the companies need lose no time when they arrive upon the scene. The President of the (Rockefeller-funded) Agricultural Development Council put it this way:
There is a tendency to give the credit for a breakthrough to the last essential element to be added (to an agricultural system, his emphasis). And if you look, for example, at the places in the world where within the last four years the Green Revolution has made extensive and even extraordinary progress, they are those parts of the world and those parts of individual countries where prior to that time the other essentials of agricultural development were already in place.32
Green Revolution is the catch-all phrase for the "modernized" agriculture that the center is touting in the periphery. Since I have dealt with this question elsewhere (How the Other Half Dies, Chapter 5) I prefer to stress here less well known aspects of the package. Seeds furnish one very good example of the trend towards uniformity.
Year after year, these sources of our future food crops are being mercilessly wiped out as agribusiness gains more and more control over seeds. Whereas even a few years ago thousands of local varieties of food grain plants still existed in the so-called' Vavilov centers' of genetic diversity,
Suddenly in the 1970s, we are discovering Mexican farmers planting hybrid corn seeds from a midwestern seed firm, Tibetan farmers planting barley from a Scandinavian plant breeding station and Turkish farmers planting wheat from the Mexican wheat program. Each of these classic areas of crop-specific diversity is rapidly becoming an area of seed uniformity.33
The seed companies are sowing ecological disaster as they reduce the world's genetic base. When farmers decide to stop saving seed and start buying it on the market, their families then eat the whole of the previous year's crop: "Quite literally the genetic heritage of a millenium in a particular valley can disappear in a single bowl of porridge."34
The two chief characteristics of hybrid seeds are that they are particularly are prone to blight and disease and that they cannot be self- reproduced. Plant breeders (and pesticide manufacturers) are only a jump or two ahead of the pests and diseases that thrive on the new "prey" as one biologist calls these crops that have not had time to adapt to natural predators and to dangers in their environments. Only reinforced chemical treatments can protect them ... so no one will be surprised to learn that in the past few years family-founded seed companies have been bought up by such chemical firms as Sandoz, Ciba-Geigy, Purex, Pfizer and Upjohn. Investments in seed companies are attractive in themselves, aside from any side effects on chemical sales. Sales inside the US have boomed, increasing by about 20% annually for the past several years, and gross margins for these companies are commonly 50% or more. US seed company sales abroad went up "only" 38% in the first three years of this decade: "Foreign markets are opening slowly but they are extremely attractive," says one executive. Another comments, "This is one hell of a profitable business."35
It is not necessarily the farmer's fault if he buys the kinds of seeds that require plenty of chemicals. For one thing, hybrids, if grown under proper conditions, give higher yields to the acre, so he often prefers them even if it means he must repurchase new seed every season and use greater quantities of other inputs. For another, the processing company to which he may be under contract will insist on seed X or Y because it wants a uniform product. This naturally also reduces the choices available to consumers. Fruits and vegetables are genetically selected for characteristics valuable to agribusiness— such as adaptability to mechanical harvesting—not to nutritional content or just plain taste.
Industry is pushing hard for universal legislation that would protect new genetic types with what amount to patents. One industry spokesman explains that a UDC has "the simple option of a huge investment in plant breeding research and testing for its own environmental conditions, or the passing of legislation under which the private international plant breeder can carry out this work."36 The word "international" and the fact that the gentleman making this recommendation works for a major chemical corporation lead one to conclude that this "private" plant breeder is not some unknown geneticist experimenting in his lonely laboratory, but is, rather, an employee of a multinational firm which hopes to gain even greater control over seed use through legal measures.
Profit-making enterprises cannot indulge in the long term view; thus the companies do not appear alarmed that genetic disaster—like the nineteenth century Irish potato blight and famine, but on a twentieth century scale—may be just around the corner. Perhaps our one white hope to avoid such induced catastrophe will be found among the poorer "backward" peasants the development planners so often accuse of being "resistant to modernization." A Swiss anthropologist has told me of his field work in an Indonesian village which had, like many other villages under official pressures, adopted the hybrid rice seeds of the Green Revolution. They stuck it out for two harvests but they disliked the taste of the new rice; what is more, they were convinced it was less acceptable as an offering to their deities. So they returned to growing their traditional varieties. I asked him how it was they still had these varieties to fall back on. It was, he said, because they had continued to set small plots aside for growing the eight or ten different varieties required for ritual offerings. To those who see this as a typical example of mystical or "pre-logical" behavior, I would reply that it also shows an enormous amount of ecological and agricultural scientific wisdom however deeply buried in religious custom—for many communities after two harvests of hybrid rice would have had no traditional seeds left at all.
Green Revolution seeds will only grow with fertilizers, controlled irrigation and drainage, and chemical protection. That the multinationals have an important stake in providing these inputs is obvious; that this connection was early recognized and fostered by their friends and allies is explained by a Mr. Kreisberg, who has links with the USDA, USAID and the Ford Foundation: "The agricultural modernization (the new seeds) signal could be the seedbed of new market economies in the world's low income countries," he says. One of the "implicit objectives" of US foreign
policy is to encourage systems in UDCs in which "private enterprise plays a larger role . . .". The new commercial agriculture will aid this aim because it is "rooted in modern technology." Green Revolution farmers must "make economic ties to a wide array of agribusinesses—manufacturers of agricultural equipment and chemicals, storage and warehouse operations, processing firms and distributing organizations . . . Businessmen from the more developed economies and international lending agencies are all engaged in efforts to increase fertilizer capacity, improve water supply and spread the use of the new technology."37
While the Green Revolution has created any number of commercial opportunities for the sale of seeds, diverse agricultural chemicals, irrigation equipment and the like, they do not necessarily demand mechanized cultivation. Farm machinery has proliferated in the Third World not so much because it is economically justified as because of a desire on the part of the wealthier, larger farmers to do away with the administrative and social problems presented by hired labor—especially hired labor which is quick to notice the higher Green Revolution yields and to draw the relevant conclusions concerning fair wage scales. US multinationals have helped to confirm such landowners in their belief that machinery can greatly reduce the level of social unpleasantness they must bear. Here is one instance:
The year was 1968, the setting a large, level wheatfield in the state of Punjab in Northern India. Nearly 10,000 farmers and many government officials were gathered to watch two John Deere self-propelled combines... demonstrate the practicality of mechanical harvesting in India.
The spectators, most of whom had never seen a combine before, lined the edge of the field as the two machines cut wide swaths through the waving grain. At the end of each hour, the two combines ... were stopped and the work they had done was calculated and announced... (The) figures were quite incredible to the farmers, because it usually takes three to four men an entire day to cut one acre of wheat by hand. . . The results of this and several other John Deere field days held in India prompted the government-owned Punjab Agro-Industries Corporation to import 60 Deere combines and offer to harvest wheat and rice for farmers on a custom basis. The custom harvesting service caught on fast and eventually spread to other irrigated areas. Today, hundreds of self-propelled combines are being used in the most productive wheat growing regions of India ... The combines also eliminate the dependence on large numbers of farm workers at harvest time.38
Various Asian authors note that low-interest government loans have helped larger farmers to mechanize, which they see mostly as a means to "get rid of tenants and to keep for themselves whatever portion of the harvest (a third to a half) used to fall due to the tenants. Mechanization primarily reduces the need for labor at all stages of cultivation and does not increase yields substantially. 'In fact, "costs involved in mechanization are higher than the corresponding profits: if purely economic criteria are applied, pumps and irrigation equipment are far better investments than machinery."39
The situation is similar in Latin America, where it is estimated that two and a half million jobs were lost from the time of the first large-scale use of machinery up to 1972.40 In spite of this heavy use of machinery (and of a lot more fertilizer), "average yields of a large number of farm products have improved very little, particularly if compared to yields in other parts of the world and, in certain cases, within the same region." The governments of South America also collaborate with the richer farmers to make it virtually impossible for landless laborers to find employment; indeed, getting rid of labor is:
usually rational at the level of the individual farm. These management decisions are made within the context of import subsidies for modern farming machinery and other inputs, over-valued exchange rates, low or negative interest rates and special tax concessions to encourage mechanization. Labor troubles, payroll taxes and increasing social unrest in the countryside provide further incentives to reduce the labor force.41
The consequences of this high-technology farming accompanied by greatly reduced employment opportunities have been higher food prices, highly concentrated land holdings, reduction in real wages for those lucky enough to have work, and rural migration which merely displaces poverty from the countryside into the cities. Large-scale mechanization might have made sense in the wide-open spaces of the U S where few extra hands were available for farm work, but contributes to social disaster in Asian or Latin American circumstances.
♦♦♦
"The consequences of this high-technology forming accompanied by greatly reduced employment opportunities have been higher food prices, highly concentrated land holding, reduction in real wages for those lucky enough to have work, and rural migration which merely displaces poverty from the countryside into cities."
♦♦♦
With the onset of the Green Revolution, purchased inputs become the rule, just as they did in the US, and farmers grow increasingly dependent on outside financing. "The necessary mercantility of the new technology elevates the credit-worthiness of the producer into an asset of the highest importance, on a par with skill in husbandry."42 At the same time that firms profit from input sales, banks expand by providing credit to this entirely new market. Usually, only the farmers with connections and collateral are considered for credit, but there are signs that Western banks may at last have noticed the small farmer. If the model we are following is of any use, it should encourage us to take such signs seriously, even though present penetration of this sector by outside interests is embryonic. Consider the speech delivered by Professor Michael Lipton of the Institute of Development Studies, Sussex, to an audience of professional bankers. The following excerpts are as summarized by the FAO Bankers Programme; (emphasis or parentheses are mine).
Professor Lipton's theme was the neglect of the small farm sector by commercial agribusiness and credit systems in developing countries, and the need to correct this situation through a new approach by banking to the problem of rural lending. Small farmers . . . though they disliked risk, were efficient in their use of resources, responsive to price changes and swift to innovate; (they work hard) and hence obtain more output per acre ... And yet emphasis is almost always on large units.... rural organization is biased in favor of large farmers while agribusiness is geared to bulk supplying of large units. But one important part of the explanation (for this bias in favor of large farmers) lies in the rural credit system. There were two extreme views about agricultural finance and rural credit. One view is that small farmers are inherently non-credit-worthy. This was demonstrably untrue—default/loan ratios were higher for large farms than for small. The other view is that good projects would attract credit anyway. This applied to only a very small proportion... The banking system could play a major part in improving this situation, but only by abandoning much of its 'conventional wisdom': by lending at higher interest rates to the small farmer and insisting on repayment, but, on the other hand, by being ready to meet his consumer as well as producer needs and to accept unconventional forms of security (wives and daughters?) At present, lack of adequate and timely credit was preventing many small risk-prone farmers in developing countries from obtaining steady, modest rises in income and output from the new cereal technologies. Efficient organization to improve this was a major challenge to the world's banking system.43
At least one bank may have heeded Professor Lipton's plea: "Barclay's International announced its willingness to provide funding for the first phase of a programme to establish the current needs for training materials in agricultural credit in developing countries." Barclays would undertake this as a follow-up to the recommendation of the FAO World Agricultural Credit Conference that "much more emphasis (should be placed) on the training of credit field staff in developing countries."44 One reason small farmers have had such a hard time obtaining credit is that banks view administrative costs on loans of "insignificant" sums as prohibitive. But if private commercial banks can train enough low-cost personnel to overcome this difficulty, we soon may see Barclays Ba
refoot Bankers tramping throughout the Third World countryside.
For it would be logical that capital's next move be towards the integration of smaller farmers into the mercantile structures of market economies; towards the extension of the Green Revolution to those who have not yet been able to adopt it. This cannot be done without credit, and if the provision of such credit turns out to be profitable for Western banks, they will not hesitate to broaden their horizons.
It is all the more important to chart agribusiness' and banking's next moves in UDCs when we recall that a mere fifteen years ago, the Green Revolution scarcely existed in the field (except in Mexico). But once the welcoming committee—the foundations, USAID, et al.—had its work done, the number of hectares planted to the new seeds literally exploded. In less than ten years, the area grew from about 50,000 hectares to more than 32 million and is still climbing. Pakistan, for example, imported 50 tons of the new seeds in 1966-67 and 42,000 tons the very next year.45
Lately, there has been so much criticism of the social effects of the Green Revolution that many people largely responsible for it have crawled back into the woodwork and are lying low. Others, like Lester Brown, no longer claim that the Revolution has caused world hunger to disappear, but insist that it has "bought us time."46 Time for what? Neo-Malthusians like Brown would answer that it has held off starvation "while we search for an answer to the population problem." Other observers would say that the time bought was paid too dear in the currency of millions of peasants' ruined livelihoods and that the damage is irreversible. Consider the case of India, as described in a confidential report prepared for the World Bank. What has occurred during this bought time that has proceeded with Western blessings? The number of agricultural laborers in the Indian workforce increased, between 1961-71, by 20 million, or more than 20%. Lester Brown might be quick to point out that this in itself reflects runaway population growth. How, then, would he explain that the number of cultivators decreased from 93 to 78 million during these same ten years? It is also significant that the number of women cultivators dropped during the same period from 27 to 9 million. The deteriorating status of women is partly caused by "growing indebtedness which leads to loss of land." Women must then become farm laborers if they can find jobs: 5 million did manage to be hired during this ten year period, increasing the number of female laborers from 10 to 15 million, but their position in the total agricultural workforce is in constant decline. The Bank also cites "sale of land by marginal farmers and outright eviction of sharecroppers ... There has been a renewed concentration of landholdings, agrarian reform nonwithstanding ... (in one district) 95% of the farmers held only half the land; 5% owned the balance. This is not exceptional."47
The Asian Development Bank (AsDB), another of the chief promoters of the Green Revolution, also remarks on what, in buying time, we have actually purchased: greater hunger and unemployment. Its report covering thirteen Asian countries over the past decade concludes that agrarian reform has been a failure, that absolute numbers of malnourished people have increased, that real agricultural wages have declined and that already catastrophic unemployment figures have been exacerbated by Green Revolution technology. The worst-off countries—India, Indonesia and the Philippines—are precisely the ones where "modernization" of agriculture has made the greatest progress. For the AsDB, "the region is no closer to solving the food problem than ten years ago."48
There is an important question one should ask at this point—a question for which I have no clear-cut answer. Have Western interests concluded that the growth of commercial agriculture in the poor countries is faltering because the social classes that can practice it are severely limited in numbers? Should they seek a new stratum of "beneficiaries?" Surely they have recognized that the innumerable peasants forced off the land by high-technology farming are not finding jobs in mushrooming cities, nor indeed anywhere else. The World Bank, for one, while not actually pronouncing the fateful words "Green Revolution," is presently talking about extending the techniques it entails to the small farm sector. We have seen that the commercial banks may also have a nascent interest in providing the credit that would allow poorer cultivators to get themselves locked into mercantile, "modernized" farming. If the hypothesis of a universal food system is valid, then it would seem that the next step may be to introduce elements of it into the self-provisioning sector which, though deeply scarred by the social effects of the Green Revolution, has as yet been unable to contribute to the profits its generates. "Small farmers" are coming into vogue inside the development "Establishment." This is all to the good if it means helping them to hold onto their land, to produce more food for themselves and their immediate communities, to escape the clutches of landlords and moneylenders. To date, however, such altruistic aims have not intruded noticeably on the plans of capitalist transformation of Third World societies.
A more likely scenario is, perhaps, that "small farmers" will be introduced to the joys of agriculture geared not to feeding people but to making money. They will aid the expansion of input suppliers; to pay for their purchases and to reimburse their loans, they will sell their harvests immediately, sometimes to other agribusinesses. If the ruling rural bourgeoisie that has already adopted the Green Revolution attempts to impede its extension farther down the social ladder, it could even happen that Western "development" planners decide to sacrifice segments of those classes that have proved themselves altogether too greedy, in order to preserve the major features of the system as a whole. Power-watchers would do well to keep an eye out for this tendency, for one unfailing and frankly admirable characteristic of capitalism is its enormous adaptability.
The Green Revolution was originally conceived not only as a way of expanding US agricultural inputs markets but also as a means of (1) obtaining adequate food supplies for the urban masses (2) creating a stable, prosperous rural bourgeoisie in the UDCs—in a word, of insuring social control without agrarian reform. Its advocates doubtless did not foresee the full implications of what Andrew Pearse has called "the talents effect"49: in the Green Revolution as in the Gospel, "to him that hath shall be given; and from him that hath not shall be taken even that which he hath." As rural unrest increases, ways to placate less favored small farmers will have to be devised. Extension of the Green Revolution to them—if necessary at the expense of part of the landholding elites—may well be one of the strategies chosen.