On the Benefits of Small Farms

If we turn toward the Third World we find similar local benefits to be derived from a small farm economy. The Landless Workers Movement (MST) is a grassroots organization in Brazil that helps landless laborers to organize occupations of idle land belonging to wealthy landlords. When the movement began in the mid-1980s, the mostly conservative mayors of rural towns were violently opposed to MST land occupations in surrounding areas. In recent times, their attitude has changed. Most of their towns are very depressed economically, and occupations can give local economies a much needed boost. Typical occupations consist of 1,000 to 3,000 families, who turn idle land into productive farms. They sell their produce in the marketplaces of the local towns and buy their supplies from local merchants.

Not surprisingly those towns with nearby MST settlements are better off economically than other similar towns, and many mayors now actually petition the MST to carry out occupations near their towns. Local and regional economic development benefits from a small farm economy, as do the life and prosperity of rural towns. Can we re-create a small farm economy in places where it has been lost, to improve the well-being of the poor?

Recreating a Small Farm Economy

Recent history shows that the re-distribution of land to landless and land-poor rural families can be a very effective way to improve rural well-being. We can examine the outcome of every land reform program carried out in the Third World since World War II, being careful to distinguish between genuine land reforms -— when quality land was really distributed to the poor and the power of the rural oligarchy to distort and «capture» policies was broken — and «fake land reforms» — when the poor have been relegated to the poorest, most remote soils. In every case of genuine land reform, real, measurable poverty reduction and improvement in human welfare has invariably been the result.

Japan, South Korea, Taiwan, Cuba, and China are all good examples. In contrast, countries with reforms that gave only poor quality land to beneficiaries, and/or failed to alter the rural power structures that work against the poor, failed to make a major dent in rural poverty. Mexico and the Philippines are typical cases of the latter.

More recently IBASE, a research center in Brazil, studied the impact on government coffers of legalizing MST-style land occupations cum settlements versus the services used by equal numbers of people migrating to urban areas. When the landless poor occupy land and force the government to legalize their holdings, it implies costs: compensation of the former landowner, legal expenses, credit for the new farmers, and others. Nevertheless the total cost to the state to maintain the same number of people in an urban shanty town — including the services and infrastructure they use — exceeds in just one month, the yearly cost of legalizing land occupations.

Another way of looking at it is in terms of the cost of creating a new job. Estimates of the cost of creating a job in the commercial sector of Brazil range from two to twenty times more than the cost of establishing an unem-ployed head of household on farm land, through agrarian reform. Land reform beneficiaries in Brazil have an annual income equivalent to 3.7 minimum wages, while still landless laborers average only 0.7 of the minimum. Infant mortality among families of beneficiaries has dropped to only half of the national average.

This provides a powerful argument that using land reform to create a small farm economy is not only good for local economic development, but is also more effective social policy than allowing business-as-usual to keep driving the poor out of rural areas and into burgeoning cities.

National Economic Development and «Bubble-Up» Economics

A relatively equitable, small farmer-based rural economy provides the basis for strong national economic development. The post-war experiences of Japan, South Korea, and Taiwan demonstrate how equitable land distribution fuels economic development. At the end of the war, circumstances including devastation and foreign occupation, conspired to create the conditions for «radical» land reforms in each country, breaking the eco-nomic stranglehold of the landholding class over rural economies. Combined with trade protection to keep farm prices high, and targeted investment in rural areas, small farmers rapidly achieved a high level of purchasing power, which guaranteed domestic markets for fledging industries.

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