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Abstract
Subsistence agriculture is probably the least understood and the most neglected
type of agriculture. In a globalised, market-driven world, it remains at the same
time a myth and a marginal phenomenon.
Empirically, subsistence agriculture for a long time seemed to be restricted to
developing countries, with only a few cases reported in Western Europe
(CAILLAVET and NICHELE 1999; THIEDE 1994). Governmental support offered to
subsistence agriculture was mainly done through agricultural development
policies, the main objective being to have subsistence farmers participate in
markets. The strategy was to make farmers produce more by introducing new
technologies and consequently bring their output to the market. Failures of such
attempts were numerous, yet attempts to understand the failures were few. This
lack of understanding led to the change of politics towards already developed
and market-oriented systems, hence to the neglect and marginalisation of
subsistence-oriented systems.
This picture changed when subsistence agriculture started to appear right at the
door of the European Union: With the fall of the Iron Curtain, subsistence
agriculture in Eastern Europe turned out to be an urgent case. Suddenly, there
were and still are a large number of vulnerable small scale farmers, many of
which will, at least by the date of EU enlargement, be entitled to receive funds
from the CAP and thus compete with western farmers. Moreover, these poor
rural people were subject to social discrimination, as no one likes to have a poor
house right next to him in his neighbourhood.
One of the now quite numerous attempts to address the problem of subsistence
agriculture in Eastern Europe was a workshop held at the Institute of
Agricultural Development in Central and Eastern Europe (IAMO) in May 2001.
It gathered scientists from Western and Eastern Europe to discuss problems of
subsistence agriculture, ways of analysing such systems and approaches to
overcome subsistence agriculture. The workshop's overall objective was to contribute some answers to the main
questions regarding subsistence agriculture in Central and Eastern Europe, but
also everywhere else on the globe. These questions are: What is the definition of
subsistence agriculture, and what are its characteristics? Is there a conclusive
theoretical approach research can rely on? Is subsistence agriculture really a
problem or is it, as so many other economic phenomena, just another efficient
equilibrium? And if it is agreed upon among scientists to be a problem, what are
possible solutions?
We shall provide a brief overview of these issues and how they are addressed in
the following contributions. Let us therefore start with the definition of
subsistence agriculture.
One of the major problems in dealing with subsistence agriculture is defining the
term as such. Many of the authors in this book offer a definition, amongst them
HEIDHUES and BRÜNTRUP, VON BRAUN and LOHLEIN, as well as LERMAN. It seems
that the preferred definition of subsistence agriculture relates it to the share of
marketed produce. The lower this share, the higher is the degree of subsistence
orientation. Still, this definition is a relative one, as it can be assumed that there
is no longer "one hundred percent" subsistence agriculture, either in Eastern
Europe or elsewhere in the world. This assumption should be kept in mind, as it
is important for the following theoretical discussion.
The assessment of the characteristics of subsistence agriculture based on the
above definition provides a link to theoretical aspects and political options to
develop this form of agriculture. The first and most prominent characteristic is
the high degree of own consumption of produce, mostly more than 50 percent.
Subsistence farms are small (although smallness does not necessarily imply
subsistence farming, as, for example, suburban horticulture farms may be small
but quite market-oriented and efficient), and they have low capital endowment,
which often contributes to low competitiveness. They also suffer from
remoteness to urban centres and have poor access to markets, be it in physical
terms (roads as well as other transportation routes and telecommunication
infrastructure), or in terms of accessing factor markets, especially capital
markets (which is a prerequisite for starting market-oriented production), and
low on- and off-farm income. The latter especially shows an important aspect:
Off-farm income opportunities are scarce and of low revenue for subsistence
farmers (see especially the macro-economic assessment by VON BRAUN and
LOHLEIN). This hints that macro-economic conditions are also important factors
driving subsistence agriculture (which will be important for both the theoretical
and the political discussion). We will find these characteristics throughout the
contributions. KEGEL provides a case study on the problems of defining
subsistence agriculture in Georgia. KOVÁCS gives a geographically based index
system to categorize farming systems in Romania. Another question is the one
whether farming systems in transition countries are really subsistence-oriented, and if yes, to what degree. The latter question is especially closely related to the
definition of subsistence agriculture, as LERMAN points out. In YEFIMOV's
argumentation, we will find that the lack of market attendance found, especially
in the former Soviet Union countries, is due to the institutional set-up of former
Soviet agriculture, which, in terms of institutional economics, used hierarchies
instead of markets to organise production and commodity exchanges. But that
means that they do exchange products and factors, so are they really
subsistence-oriented in the narrow sense of above, or do they just use other
institutions to interact with the outside world? NEDOBOROVSKYY gives an
appealing quantitative description of such hierarchy-integrated systems.
The next problem is to provide a theoretical framework for subsistence
agriculture. In theory, subsistence is seen as just an early stage of development
that will perish once Ricardos' comparative advantages are perceived and result
in wealth-generating trade (ROSE and SAUERNHEIMER 1995). Newer approaches
provide different theoretical models to subsistence agriculture which are
somewhat contradictory to each other; a broad scope of them is given by
HEIDHUES and BRÜNTRUP. One of the theories described is based on the
assumption of inverse supply reaction due to satisfactory behaviour in
production which does not go beyond consumption needs, or (assuming that
some share of the produce is marketed) liquidity requirements. This behaviour is
seen as caused by strong preferences for leisure and has been brought up by
authors like Chayanov, cited by HEIDHUES and BRÜNTRUP. Yet, this should be
discussed critically, as incorporating leisure implies that people would reject
higher incomes for the same labour input for the sake of more leisure and thus
act irrationally in the strict sense of the homo oeconomicus model. Nonetheless,
backward sloping supply functions have been explained by authors who point
out that short-term post-harvest sales may increase with decreasing prices due to
liquidity constraints, but that in the longer run, even subsistence farmers will
react positively to increasing prices (HENZE 1994; ABELE 2001).
Another, argument strengthened by HEIDHUES and BRÜNTRUP is the transaction
cost approach, which says that high transaction costs in marketing make selling
unattractive, and keep people from buying expensive products, which adds up to
self-produced consumption. This may be so, and one could even add mere
transportation costs to the list of trade impediments. But, at least as far as
transaction costs and the resulting margins are concerned, one could as well
assume that, when supply decreases, and farmers turn to their own subsistence
production, traders would offer higher prices to producers and lower prices to
consumers. This would then cover the transaction costs or reduce the margins,
respectively, for consumers. Consequently, transaction costs can only be seen as
a temporal explanation for subsistence agriculture.
The next issue raised by HEIDHUES and BRÜNTRUP is that risk keeps subsistence
farmers from developing their business, be it production risk based on climatic factors or market risks based on price volatility. But it seems that risk has to be
considered as a two-way process, affecting and being caused by subsistence
agriculture: autarchy is prone to production risks that cannot be buffered by
functioning markets. In fact, this argument may rather hold for developing
countries in the tropics than for of mid-European climate. However, PETRICK
and TYRAN show, in their contribution about Polish subsistence farmers, that
market-oriented farmers are less risk averse than subsistence-oriented farmers.
This is most probably because market-oriented farmers can afford to take risks –
they are covered by markets, cash reserves earned from markets or based on
credit lines from banks. Both MISHEV and KOSTOV and KOPEVA and NOEV
emphasize the function of subsistence agriculture to buffer hardships arising
from the economic transition process. This means that subsistence agriculture
can also be seen as insurance against economic risks – albeit a fragile one. The
latter argument brings us back to the macro-economic environment of
subsistence farmers that has already been addressed above: subsistence
agriculture is applied because there are no alternatives. To conclude this section,
we may come back once again to HEIDHUES and BRÜNTRUP who discuss this
"fuzziness" of theoretical approaches to subsistence agriculture and the research
gaps that still exist. The decisive point in their discussion is the statement about
the presumed non-economic behaviour of subsistence farmers, which they prove
to be wrong. In the words of Ruttan, "They claim that one has to understand
economic systems before judging them."
One of the first steps of organising this workshop was to justify why subsistence
agriculture is a problem at all. Some authors see subsistence agriculture as a
sustainable economic system because of its autarchy (DOPPLER 1991). Others
would argue that it cannot be a problem because if it were inefficient, it would
not exist. Finally, a third group would argue that subsistence agriculture is no
problem at all but rather a solution, as it provides relief from the curses of
globalisation and modernisation. In fact, the subsequent contributions to the
seminar will prove that all of them are wrong. In the first place, the organisers of
the seminar argued that subsistence agriculture is critical for two reasons:
First, autarchy is prone to production risks that cannot be buffered by
functioning markets. This has already been discussed in the theory section. The
second argument raised by the organisers was that subsistence agriculture yields
lower incomes than market-oriented agriculture. It is again PETRICK and TYRAN
who point out the relationship between income on- and off-farm and subsistence
orientation: Subsistence farms seem to have a lower agricultural income than
market-oriented farms, but they also seem to have lower income from off-farm
employment. LERMAN comes to the same conclusions. The same phenomenon is
picked up on the macro-economic level by VON BRAUN and LOHLEIN, who prove
that the lower the national income is, the higher is the number of subsistence plots. It is thus easy to conclude that subsistence farmers are overall
disadvantaged, and that subsistence agriculture really is a problem.
The next point to discuss is the future of subsistence agriculture: in the
contributions from Central Europe by PETRICK and TYRAN, as well as NOEV,
ways of getting out of this stage of farming are discussed: investment in
agriculture and subsequent farm growth will help subsistence farmers to become
market-oriented. The same findings are highlighted for both Central European
and Central Asian countries assessed by LERMAN. He also describes ways and
solutions for the development of subsistence farmers, namely, improved access
to input and output markets, but also to credits as well as services (especially
extension) to ensure the potential for farm size growth. This also requires the
proper functioning of factor markets, both land and labour, as both factors have
to be re-allocated during the commercialisation process. Organisations are seen
as a crucial factor of farmers' empowerment, as they may strengthen farmers'
positions on markets, and they may also provide the utilization of economies of
scale without the need to re-allocate factors. A last point to improve agriculture
and make it more market-oriented is given by WEHRHEIM and WOBST: They
claim an improvement of institutions, namely markets and trade policies, would
foster trade and reduce transaction costs, so that incentives for farmers would be
given to producing and marketing more of their product.
Making farms more efficient is a necessary but not a sufficient solution to the
problem of subsistence agriculture. As many of the authors will show,
subsistence agriculture is also driven by a lack of alternative income sources,
mainly in rural areas but also in urban sites. YEFIMOV points out that Russian
subsistence farmers might as well resist a restructuring of post-Soviet
agriculture, because that would, even while making agriculture more efficient,
make them lose their only income source, as there is no alternative in Russian
rural areas. That leads to the point that creating income alternatives in rural areas
is a decisive prerequisite for overcoming subsistence agriculture. This argument
is strengthened by the analysis of VON BRAUN and LOHLEIN as cited above.
But how to address this? NUPPENAU's contribution provides an overview: better
linkages of agriculture to the downstream sector will increase both primary
production profits and create off-farm jobs, thus increasing economic wealth in
rural areas. This might be feasible, but it has to be stated that this cannot be done
by agricultural policies alone. Structural policies must aim to develop rural
areas, improve infrastructure and the climate for investments, and finally create
a favourable environment for the downstream sector and other industries that
will provide a labour market for those who have to quit agriculture. Structural
policies also have the task of facilitating factor mobility, which is a crucial point
for rural development. But let us now leave the introductory remarks and go for a journey through
Eastern Europe and its subsistence farming systems. We will start with the
keynotes, which discuss theoretical approaches of subsistence agriculture, and
possible institutional and political solutions. We will then go from the West to
the East, starting in Poland, down to the Balkans, crossing over to Central Asia
and ending up in Russia, where the most interesting systems, but also a
tremendous pace of change, are found. By travelling this way, we shall, so is the
hope of the editors, find some answers to the questions raised above, and also
find some sympathy for those who have to struggle for their livelihood by
farming their small plots. These people probably need the assistance of scientists
and politicians more than anybody else.