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Grain substitution and food dependency in the Third World
Grain substitution and food dependency in the Third World Evidence from cross-country data
Donald G. Richards
Critics of the green revolution in agriculture have argued that the introduction of high-yielding varieties of seed and their requisite complementary inputs to the countries of the Third World have actually rendered these countries more food dependent than before. It is also argued that the internal results of this technology transfer have been increasing inequality in the distribution of income and growing malnutrition of the majority of the populations in these countries. The purpose of this paper is to examine empirically the relationships between so-called ‘grain substitution’ and several indicators of human welfare including malnutrition and child mortality. The study is based on cross-country data covering over 70 nations in the Third World and a time period extending from the early to mid1960s through 1969190. The results suggest a negative and statistically significant relationship between social welfare and the process of grain substitution. On the other hand, the data do not support the proposition that grain substitution is significantly related to levels of external food dependency. The author is Associate Professor, Department of Economics, Indiana State University, Terre Haute, IN 47809, USA (Tel: 812 237 2179; fax: 812 237 4349). The author wishes to thank Paul G. Burkett for helpful comments on this paper. Remaining errors are the responsibility of the author alone. ‘Gottfried
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Haberler, lnfernational Trade continued on page 483
The relationship between agricultural structure, trade and food dependency has been the focus of growing theoretical and empirical debate in the social sciences for at least two decades. At issue is whether or not a country ought to engage in widespread production of agricultural output destined for export at the expense of its ability to achieve, or maintain, food self-sufficiency. Proponents of export-oriented agriculture typically invoke familiar arguments about the efficiency superiority of free trade.’ Specifically, it is argued that a country maximizes social welfare when it allocates productive resources according to the principle of comparative advantage and trades for those goods in which it is a relatively high-cost producer. The consequences for the productive structure of such a free-trading country typically imply a narrowing of the range of its productive activities relative to that which would result in a condition of autarky. This is not considered problematical inasmuch as the variety of the country’s consumption needs may more efficiently be met by imports. It is also sometimes argued that in the absence of trade certain sector-specific productive resources will remain unemployed due to the inadequacy of domestic demand for their associated final outputs. This ‘vent for surplus’ argument goes back as far as Adam Smith and has been advanced by Myint for the case of the less developed countries.2 Scepticism about the desirability of unfettered free trade from both a theoretical and an empirical perspective is as old as the arguments in its favour. In fact there is no debate in political economic discourse with a longer historical lineage than that concerned over the relative merits of free versus restricted trade. While the preponderance of professional opinion among mainstream economists seems to favour the free trade position there is substantial disagreement as to whether this should be extended to include food production and trade as readily as to most other lines of economic activity.3 Food is often thought to occupy a special position in the hierarchy of production values given its obvious nature as a fundamental necessary for human life and well-being. Few
0306-9192/93/060482-l
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1993 Butterworth-Heinemann
Ltd
Grain substitution and food dependency
continued from page 482 and Economic Development, National Bank of Egypt Fiftieth Anniversary Commemoration Lectures, Cairo, 1959; A.K. Cairncross, Factors in Economic Development, George Allen & Unwin, London, 1962; Anne Kruegar, ‘Comparative advantage and development policy 20 years later’, in Moshe Syrquin, Lance Taylor and Larry Westphal, eds, Economic Structure and Performance: Essays in Honor of Hol/is B. Chenery, Academic Press, Orlando, FL, 1984. *H. Myint, ‘The classical theory of international trade and the underdeveloped countries’, Economic Journal, Vol 68, No 270, 1958. 3For a recent survey of the literature that discusses a variety of the controversial issues surrounding agriculture and international trade, see Simon Maxwell and Adrian Fernando, ‘Cash crops in the developing countries: the issues, the facts, the policies’, World Development, Vol 17, No 11, 1989, pp 1677-1708. 4William Schneider, Jr, ‘Agricultural exports as an instrument of diplomacy’, Food Policy, Vol 1, No 1, November 1975, pp 23-31. ‘Francis Moore Lappb and Joseph Collins, World Hunger: Twelve Myths, Grove Press, New York, 1986. ‘Michael Lipton and Richard Longhurst, New Seeds and Poor People, Johns Hopki($s9. University Press, Baltimore, MD, ‘David Barkin, Rosemary L. Batt and Billie Ft. DeWalt, Food Crops vs Feed Crops: Global Substitution of Grains in Production, Lynne Rienner, Boulder, CO, 1990.
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societies are willing to forgo the capacity to produce basic foodstuffs in the interest of global economic efficiency. Recent discussion advocating the use of food as an international weapon makes abundantly clear the vulnerability of a nation given to excessive food dependency.4 Given the obvious desire on the part of most nations to maintain at least a modicum of food self-sufficiency, the relevant question then becomes the degree to which a given country ought to specialize its agriculture away from production intended for home consumption and towards that intended for export. Related to these concerns about the structural orientation of basic agriculture is the question of the impact of agricultural technology on food dependency, income distribution and social welfare. The failure of the so-called green revolution to deliver on its early promise to prevent periodic famine and to alleviate to any satisfactory degree widespread undernourishment for a significant portion of the world’s population has inspired a voluminous literature critical of the phenomenon. It is frequently argued that the introduction of high-yielding varieties (HYVs) has had the consequence of rendering the less developed countries more dependent on food imports at the same time as it has resulted in creating further inequalities in the distribution of income.’ As a result, many countries that have participated fully in the green revolution are nonetheless still characterized by widespread hunger, perhaps even to a greater degree than they would otherwise be if they had not introduced the miracle seeds. A common rejoinder to this criticism is that the green revolution technology itself should not be held responsible for the failure of countries to deal adequately with the distributional issues related to widespread poverty and undernutrition. In the absence of necessary institutional reforms, it is argued, the new technology cannot be expected to eliminate these social problems.6 It is also argued that the apparent failure of the green revolution derives from its insufficient application. In this light, the key to achieving reductions in poverty requires more thorough applications of the technology to include small landowners so as to increase their productivity, the latter being necessary and sufficient for increasing real wages. The purpose of the present paper is to empirically assess these contending perspectives. In particular, I wish to test the hypothesis that the prevelance of malnutrition in the world bears a meaningful relationship to the changing commodity structure of agriculture in the Third World. Attention will be paid to a particular radical critique of the green revolution offered by Barkin, Batt and DeWalt.’ The position of these authors is that the introduction of high-yielding varieties of grain from the developed countries has had the effect of distorting the structure of agricultural production in the less developed countries in such a way as to render them increasingly dependent on the former to provide them with their basic food needs. Moreover, this pattern of structural distortion has had the effect of increasing the levels of income inequality, poverty and malnourishment in the LDCs. In essence, the integration of the LDCs into the world commodity markets, via a process of internationalization of capital, has promoted a structure of domestic production that bears little relation to the consumption needs of the majority of their populations. Against this hypothesis I will test the competing one that the source of continuing rural misery in the Third World is the failure to raise
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sufficiently the productivity of land and labour in agriculture.8 This is the perspective offered, for example, by Hayami and Ruttan.’ They argue that declining real wages in the LDCs are the result of rapid population growth, an expansion in the labour supply and a corresponding decline in the marginal productivity of labour. The solution to these problems is provided by a combination of labour-using, land-saving technology in the agricultural sector along with a growth in the demand for non-farm labour. The authors recognize that technical progress in the agricultural sector may in fact be capital-using and labour-saving, which would result in greater income inequalities. They argue, however, that there is nothing inherent in the green revolution technology itself that promotes this tendency. Rather, it is improper government policies that encourage an overuse of capital while the green revolution techniques are themselves actually scale-neutral.
Grain substitution and food dependency
‘In characterizing these hypotheses as ‘competing’ I do not wish to imply that Barkin, Batt and DeWalt, or other radical critics of the green revolution for that matter, entirely dismiss the importance of raising agricultural productivity levels as a means of combating hunger and malnutrition The difference between the two perspectives, as I see it, is largely a matter of the emphasis each wishes to attach to the relative importance of technology versus institutional change. ‘Yujiro Havami and Vernon W. Ruttan, ‘The green revolution: inducement and distribution’, Pakistan Development Review. Vol 23, No 1, Spring 1984, pp 37-63. “Barkin et al, op tit, Ref 7, p 12. “Ibid, p 20.
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Central to understanding the effects of the green revolution in the LDCs is the phenomenon of grain substitution. Barkin et al describe the process of grain substitution as occurring when the share of one or more grains in a country’s overall production is increasing relative to other grains. lo Rather than reflect changing dietary habits of the majority of the population, however, grain substitution more often than not occurs in response to the increasing demand for meat and other non-traditional grains on the part of the middle and upper classes, uses of grain for industrial production, or increasing grain exports. The consequence for the poor majority is its further social and economic marginalization. In fact, the marginalization of the rural poor also occurs geographically insofar as poor tenants and other small producers are unable to compete for agricultural inputs, irrigation facilities and bank credit, and are forced to sell their land. In other cases, small, poorer producers are forced to occupy poorer, marginal lands that depend on rainfall for their water needs and are located far from storage and marketing facilities. The market disadvantages faced by the smallholding sector are often exacerbated by discriminatory government policies that favour large capital-intensive, agro-industrial interests. Such policies may take the form of direct subsidies and preferential credit terms for the latter. They may also take the form of state pricing policies that support the prices of the new grains while repressing the prices of traditional food staples. The latter is often viewed as desirous from the standpoint of pursuing a ‘cheap food policy’ necessary to support industrialization. Just as often, however, the result has been to force small producers to abandon the land entirely since domestic foodgrain production is no longer profitable.” Consequently the nation as a whole becomes increasingly food dependent on external sources and the nutritional levels of both rural peasants and urban workers deteriorate. In order to empirically assess the theoretical positions outlined here it is obviously useful to have some means to determine the degree to which the process of grain substitution has taken place in the LDCs in recent decades. The issue is a complicated one for a variety of reasons. First, the same grain may have a variety of uses, including the obvious one of providing a staple commodity for low-income groups. Corn, for example, is the dominant staple grain commodity for many countries in Latin America, but it also serves as an important source of feedgrain for
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the raising of livestock. The available data do not allow us to distinguish between these two uses of the commodity and, for that reason, merely measuring the comparative growth in its production may give a misleading impression of its relative contribution to meeting the food needs of the relevant countries. A second problem is, of course, that different countries make use of different grains as the basis for their respective staple commodities. While corn is the staple grain of choice in most of Latin America, rice, wheat and sorghum have this role in many parts of the Third World, including some Latin American countries. Care must be taken to identify the dominant foodgrain in particular country cases. Third, a way must be devised to represent the necessarily dynamic notion of grain substitution. Clearly a consideration of the comparative growth rates of various commodities is inadequate inasmuch as this approach in and of itself tells us nothing necessarily about the degree of grain substitution. The relative growth rates of production of commodities may be a function of the relative rates of growth of technical productivity associated with their cultivation and, as such, may not indicate anything in particular about structural change in the agricultural sector. Moreover, rapid growth in any particular line is not necessarily associated with a dominant absolute, or relative, position for a commodity in the agricultural sector. The particular measure of grain substitution that I wish to employ for the purposes of this study is expressed as follows: GRASUB
= log
(LGRTOTCR)ss (LGR/TOTCR)61_65
(I)
where GRASUB is the measure of grain substitution, LGR is the single largest grain commodity produced in a given year, and TOTCR is the total quantity of cereals produced in a given year. GRASUB is expressed then as the ratio of the proportion of total cereal production accounted for by the value in 1988 of the single largest category of grain production over the period 1961-65 to the average proportion of total cereal production accounted for by that same grain over that same period. Numerically, GRASUB ranges from zero to positive infinity. The smaller GRASUB is, the greater the amount of grain substitution that is presumed to have occurred. The rationalization for this interpretation of the variable is straightforward. The grain identified as the single largest category of grain production over the period 1961-65 is taken to be the most important staple food produced in the country prior to the realization of the effects of the green revolution. As such it constitutes the country’s single most significant ‘traditional crop’. GRASUB then measures the relative importance of this traditional crop in the overall structure of agriculture more than two decades later after the structural changes associated with the new technology have been felt. If these effects have been significant then we would expect the traditional crop to have been eclipsed by other cash crops and, hence, the value for GRASUB will be low. If little structural change in the commodity composition of agriculture has occurred, then we would expect the traditional crop to have maintained its relative importance and the corresponding value for GRASUB will approach, or perhaps even exceed, 1. It will be noted that GRASUB is not a perfect measure of grain substitution. The choice of one, rather than two or three, grains around
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Grain substitution and food dependency
in the Third World Table 1. OLS results for Equation (1).
a,b.cindicate statistical significance at the 0.10, 0.05 and 0.01 levels, respectively.
Variable
Parameter estimate
INTERCEPT GRASUS AGPROD GNPPC GNP
0.0252 0.1770 -0.2729 0.8527 -0.3045
Dependent variable = FDDEP Standard error 1.6756 0.2565 0.2311 0.1453 0.0784
t-statistic 0.013 0.085 -1.161 5.866’ -3.886’
F(6, 67) = 7.260’ Adj R* = 0.3397
which to define traditional staple food production is somewhat arbitrary. Too wide a definition of traditional food production, however, runs the risk of reducing the ability of the measure to identify genuine grain substitution. A measure that includes two grains, for example, may account for the same proportion of total cereal production in each of the time periods under consideration. At the same time, however, it may fail to capture the possibility that a great deal of substitution of one of these constituent grains has occurred for the other. An obvious advantage of GRASUB is that it does not identify a specific grain, or grains, as the traditional staple crop across countries, recognizing that this will differ according to specific country and region. Also, GRASUB has a dynamic character inasmuch as it captures changes in the grain structure of agriculture rather than measuring such production at a particular moment in time.
Empirical analysis As discussed above, a salient hypothesis offered by the literature critical of the green revolution is that countries that have adopted the new technology have suffered increasing food dependency. In Barkin et al’s critique, the introduction of the new seeds by international agroindustrial corporations has led to grain substitution and increasing food dependency. On the other hand it is argued by proponents of green-revolutionstyle technical change that the failure of nations to achieve food self-sufficiency is due to the continuing low level of productivity in their agriculture. To assess these propositions the following one-equation mode1 is specified: FDDEP
“All variables are defined and data sources are provided in the Appendix. %egion dummy variables are also included in the estimation of Equation (2). 14Equation (2) is estimated in double-log transformation form. Incomplete information for some countries on some variables requires that some of the statistical estimations use less than the full sample of countries.
486
= a0 + arGRASUB a,GNP + u2
+ CQAGPROD
+ aaGNPPC
+ (2)
where FDDEP is a measure of food dependency, AGPROD represents agricultural productivity in cereal production, GNPPC is per capita gross national product, and GNP is the level of gross national product.12 The last two variables are included in the model to control for country-specific characteristics associated with country size and level of development.‘” Equation (2) is estimated by the technique of ordinary least squares using data for 90 LDCs. l4 Regression results for Equation (2) are given in Table 1. The results provided in Table 1 do not support the hypothesis that a high degree of grain substitution is associated with high levels of food dependency. The parameter estimate linking the two variables, fir, while not statistically significant, is positive. On the other hand, the
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Table 2. 3SLS results for Equation (2).
INTERCEPT
a,b,c indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
“It is interesting to note that essentially the same results are obtained when the dependent variable is replaced by one that measures the change in the level of food dependency over the period 1960-88. “The Hausman test of endogeneity is performed separately for each of the suspected endogenous variables and the null hypothesis of endogeneity cannot be rejected at the 0.12 level of statistical significance: J.A. Hausman, ‘Specification tests in econometrics’, Economefrica, Vol 46, 1978, pp 1251-1271. For a discussion of the three-stage least squares procedure, see A. Zellner and H. Theil, ‘Three-stage least squares: simultaneous estimation of simultaneous equations’, Econometrica, Vol 33, 1962, pp 54-78.
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FDDEP
Endogenous GRASUB
-1.406
-2.435’
GRASUB
0.893
AGPROD GNPPC
a.094 6.195’
GNP FERDEP COMM
-4.279c
1.141 2.980’ -1.537
variables AGPROD 14.465’ 1.004 0.102 2.329b 1.771a 1 .767a
GNPPC 3.386’ 2.980’ 0.727 3.242’
System weighted R* = 0.4228
results do provide limited support for the competing perspective that explains food dependency in terms of lagging agricultural productivity. Once again, however, the test statistic does not indicate statistical significance. The only statistically significant results, in fact, suggest that food dependency is positively related to per capita GNP and negatively related to the level of GNP.15 These results are not surprising since a high level of GNP per capita is consistent with a high level of imports of luxury food items while a low level of absolute GNP is associated with small-country dependency on foreign trade. Consideration of the single-equation model given in the above equation raises some important theoretical as well as econometric issues. First of all, it is possible that simple ordinary least squares is an inappropriate estimation approach inasmuch as there exists the possibility of multicollinearity among the right-hand-side variables. In particular, it is to be expected that the level of agricultural productivity (AGPROD) and the level of gross national product per capita (GNPPC) bear a direct relationship to one another. It would also make sense to suspect a significant degree of collinearity between the degree of grain substitution (GRASUB) and AGPROD since the influence of the new agricultural technology is theoretically expected to result in increases in both variables. In general, theoretically, we would expect several variables expressed in Equation (2) to be functionally related to one another. A more appropriate estimation procedure would treat each of them as endogenous in a system of simultaneous equations. Towards this end the variables GRASUB, FDDEP, AGPROD and GNPPC are each treated as endogenous and the model is re-estimated via the technique of three-stage least squares (3SLS).16 In this version of the model each of the right-hand-side variables in Equation (2) is used as a regressor for each of the suspected endogenous variables. Two additional explanatory variables are included in the equation describing AGPROD. These are FERDEP, a measure of foreign fertilizer dependency, and COMM, a measure of the degree of commercialization of the agricultural sector. The motivation for such a specification is the interpretation of the last two variables as indicative of the introduction of the green revolution in the agriculture of the less developed countries. As such the theoretical expectation is that they will each be directly related to the level of agricultural productivity in the cerealproducing sector. The 3SLS estimation results are given in Table 2. For the equation that describes food dependency (FDDEP) the results in Table 2 are virtually identical to those obtained by OLS and presented in Table 1. Again we note that FDDEP bears an inverse relationship to both the degree of grain substitution and agricultural productivity. In neither of these cases, however, is the relationship
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Grain substitution and food dependency
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statistically significant. The levels of gross national product and GNP per capita are significantly related to FDDEP, confirming the OLS results. The signs on these parameters suggest that richer and smaller countries are more likely to be food dependent than poorer and larger ones. That smaller countries tend to be more food dependent than larger ones makes intuitive economic sense for the same reasons that suggest the greater trade dependency of small nations in general. The equation explaining GRASUB itself suggests that it is more likely to be the poorer countries (as measured by GNP per capita) of the Third World that are more likely to have embarked on the process of grain substitution. A possible interpretation of this result is that such poor countries have felt a greater compulsion to seek profound agricultural transformation as a solution to their poverty. Also notable is the negative sign attached to GNP in this equation. Though the corresponding t-statistic is too small to indicate significance, the sign suggests that it is the larger countries (in terms of GNP) in the sample that have engaged in greater grain substitution. The results for the equation describing overall productivity in the cereal-producing sectors (AGPROD) indicate that the two additional variables serving as proxies for the effects of the green revolution (FERDEP and COMM) are each positive in their influence and significant at the 0.10 level. Once again we also note evidence that larger countries seem to enjoy higher levels of sectoral efficiency than smaller 0nes.l’ As noted earlier, the critical perspective on the green revolution and grain substitution argues that whether or not advances in factor productivity are associated with the introduction of the HYV seeds, the new technology has not resulted in widespread improvements in nutrition levels for the majority of the poor populations of the adopting countries. The relationship between grain substitution and these welfare concerns might be expressed in the form of the following model: WEL
= PO + PiGRASUB l&GNP +
“The regression model was also estimated disaggregating the data set both by geographical region as well as by level of development. In general the results are very similar to those obtained for the full sample. Detailed results are available from the author upon request.
488
+ P,AGPROD
+ P,GNPPC
+ (3)
~3
In Equation (3) the left-hand-side variable is some measure of societal welfare related to hunger and malnutrition while the right-hand-side variables have the same meanings as earlier. As specific measures of the dependent variables we may consider a number of plausible alterna.tives. Three, in particular, for which there exist data on a relatively large number of LDCs are the percentage of under-weight children under 5 years of age (MAL), the under-5 mortality rate per 1000 live births (MORT) and the daily calorie supply as a percentage of requirements (CAL). The working hypothesis is that both GRASUB and AGPROD relate negatively to the first two of these and positively to the third. The OLS estimates for the three versions of Equation (3) are given in Table 3. The results in Table 3 are interesting inasmuch as they suggest that both high degrees of grain substitution and low productivity in agriculture are related to high levels of child malnutrition in the Third World. Also, and not surprisingly, high levels of malnutrition are inversely related to the level of GNP per capita. Larger countries are more likely to be characterized by high levels of malnutrition than smaller ones. Each of these results is significant at a reasonable level of statistical reliability. With respect to the other measures of nutritional well-being, MORT and CAL, the direction of the hypothesized relationships
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Table 3. OLS results for Equation (3).
MAL
*,m indicate statistical significance at the 0.10, 0.05 and 0.01 levels, respectively.
Dependent variables MORT
CAL
INTERCEPT GRASUB AGPROD GNPPC GNP
8.061’ -1.923= -3.028’ -13.572’ 16.759’
4.732’ XI.289 -2.442b -13.890’ 16.482’
13.720’ 0.340 1.72V 8.146’ X1.160
F-stat Adj R2
101.33c 0.9276
63.153’ 0.8439
14.342’ 0.5230
between these variables and the independent variables is confirmed. They are statistically significant, however, only in the case of AGPROD, while the overall explanatory power of the models is reduced as compared to the previous version. Hence, while there is some statistical support for the critical view that grain substitution is associated with the nutritional immiseration of poorer countries, the above results underline the importance of the association between nutritional levels and agricultural productivity. Statistical association does not, of course, establish causality. Nonetheless, theoretical intuition would seem to suggest that high and, perhaps more importantly, increasing levels of agricultural productivity are at least necessary keys to rising levels of nutrition for poor nations. At the same time we should not discount the observation made by critics of the green revolution ** that productivity advances made in particular subsectors of LDC agriculture are consistent with lagging, or declining, conditions in other food-producing sectors. This is the view that is commonly referred to as agricultural dualism. l9 Of particular concern is the growth of productivity in sectors producing food staples for domestic consumption. In this regard it would be interesting to investigate the relationship between the change in the structure of agricultural production and the productivity of domestic staple goods production. Is the technical dynamism associated with widespread grain substitution transmitted to the staple goods sector of the LDCs, or does it result in agricultural dualism whose consequence is the marginalization and neglect of the latter sectors? The following model attempts to shed light on this question. STAPLE “Keith Griffen, The Political Economy of Agrarian Change: An Essay on the Green Revolution, Harvard University Press, Cambridge, MA, 1974; Alain de Janvry, The Agrarian Question and Reformism in Latin America, Johns Hopkins University Press, Baltimore, MD, 1981. ‘qhe dual character of agriculture, as de Janvry notes, does not imply that the two sectors are autonomous of one another in the manner described by Schultz and Lewis: T.W. Schultz, Transforming Traditional Agriculture, Yale University Press, New Haven, CT, 1964; W.A. Lewis, ‘Economic development with unlimited supplies of labour’, Manchester School of Economic and Social Studies, Vol 22, 1954, pp 139-191. Rather they are functionally related insofar as the food-producing sector produces the wage goods that sustain the rural and urban working class.
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= p. + piGRASUB P,GNP
+ ~4
+ pzAGPROD
+ p3GNPPC
+ (4)
In Equation (4) the dependent variable, STAPLE, represents the change in the productivity of staple good production and is expressed as follows: STAPLE
= log
W/HA901 (KG/H&-&
where KG/HA (kg per ha) is the land productivity associated with the single most important staple grain commodity over the period 196165. Hence STAPLE represents the change in this productivity over the period 196165 up to 1990. The right-hand-side variables have the same meanings as before. The OLS estimation results are given in Table 4. The results in Table 4 do not support the view that grain substitution has had an adverse effect on productivity growth in staple good production. In fact we find a negative and statistically significant
Grain substitution and food dependency
in the Third World Table 4. OLS results for Equation (4).
abc indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
Variable
Parameter estimate
INTERCEPT GRASUB AGPROD GNPPC GNP
-2.3293 -0.2235 0.2841 0.0885 -c.o005
Dependent variable = STAPLE Standard error 0.9405 0.1289 0.1156 0.0658 0.0356
t-statistic -2.47? -1.734a 2.457b 1.345 -0.709
F(6, 79) = 2.024 Adj R” = 0.0722
relationship between GRASUB and STAPLE. Perhaps more significant is the positive relationship between overall agricultural productivity and the change in staple goods productivity. Overall, then, the cross-country evidence supports the view that the technical progress associated with the green revolution, and the accompanying process of grain substitution described by Barkin et al, are consistent with rising levels of agricultural productivity, including productivity in the staple goods producing sectors of the LDCs. This evidence would seem to suggest that the process of grain substitution does not imply a worsening of a country’s ability to provide itself with adequate levels of staple goods production to meet its basic food needs. In fact, as long as the rate of productivity advance in the staple goods sector is sufficiently large, a country may be able to produce sufficient amounts of its basic foodgrain to meet the needs of its expanding population on a constant, or even a diminishing, land area. To test the relationship between grain substitution and a country’s ability to produce adequate levels of its basic staple crop, the model given in Equation (4) is respecified, substituting for the dependent variable, STAPLE, a new variable, STAPLE2, that measures the ratio of per capita good production in 1990 to per capita staple good production in 1963. ‘Staple good production’ is defined in this respecification in the same manner as it is in the definition of STAPLE. The OLS results for this respecified model are given in Table 5. The results given in Table 5 give strong support to the argument that grain substitution has negative consequences for the ability of countries to maintain high levels of production of their staple grain on a per capita basis. The results in Table 5 also support the claim that countries’ ability to meet these staple goods needs is strongly tied to the level of overall productivity of land. Comparing the results in Table 5 with those in Table 4, then, suggests that while grain substitution does not prevent countries from achieving high levels of productivity in their staple goods production, it does impinge on their ability to maintain high per capita levels of production of those same goods. A further implication of the comparison of these results is that rising productivity is a necessary, but
Table 5. OLS results for Equation (5).
ab.c indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
Variable
Dependent variable = STAPLE2 Parameter estimate Standard error
t-statistic
INTERCEPT GRASUB AGPROD GNPPC GNP
-4.7660 0.9788 0.5191 0.1029 0.0023
-4.748’ 7.11oc 4.191c 1.479 0.062
1.0037 0.1377 0.1239 0.0695 0.0381
F(6, 82) = 16.393 Adj R* = 0.5297
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not sufficient, production.
condition
for high
levels
of per
capita
in the Third World
staple
goods
Summary and conclusions
“Amartya Clarendon
Sen, Poverty and Famines, Press, Oxford, UK, 1981.
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The empirical results of the present study offer an interesting, though ambiguous, picture of the relationship between the forces of international trade, agricultural transformation and nutritional status in the Third World. On the one hand there appears to be no significant relationship between the process of grain substitution and the condition of food dependency across the less developed countries. Rather, food dependency is better explained by the variables gross national product and gross national product per capita, with small and richer countries tending to greater dependency than larger and poorer ones. Neither does it seem to be the case that grain substitution has negative effects on the technical progressivity of staple goods production. On the contrary, the evidence shows a direct and significant relationship between these variables. Perhaps more to the point, staple goods productivity bears a positive relationship to overall agricultural productivity across nations. By themselves these results would seem to strongly contradict the radical critique of the effects of the green revolution on subsistence agriculture. However, the results present here also indicate some support for the radical view that the process of grain substitution is associated with both high levels of malnutrition and low levels of staple goods production per capita. Is it possible to reconcile the apparent contradiction raised by these results? I believe that the answer is yes. Reconciliation resides in the fact that the process of grain substitution has resulted in the increased marginalization, and in some cases dispossession, of the small peasant producer. The agricultural transformation that has accompanied the green revolution, while stimulating the introduction and dissemination of new grains in the less developed countries, has also had an important transformative effect on the traditional goods-producing sector. While prior to the influence of the green revolution much of the production of food staples lay in the domain of small (often subsistence) production, with the rise in land values associated with the new technology many peasant producers were forced off the land and into the rural labour force. In this manner the production of even traditional crops became associated with wealthy agro-industrial enterprises that were able to acquire increasingly expensive lands and to afford the expensive input package associated with the modern technology. The difficulty in providing further econometric support for this theoretical interpretation of the present results is the lack of adequate cross-national data on the effects of the green revolution on the distribution of income and agricultural assets. This obstacle underlines the limitations of the present methodological approach and suggests that further investigation requires that the issue be examined at the level of those individual countries or regions for which the requisite data exist. Nonetheless the present results are consistent with the view that continuing malnutrition in the Third World is, to use Sen’s expression, a failure of food entitlements rather than a failure to raise agricultural productivity.20 It might be argued that the green revolution technology broadens the
Grain substitution and food dependency in the Third World
food entitlements of even the landless poor in the less developed countries insofar as it results in restraining food prices and thereby augmenting the real wages of rural and urban workers. This assumes, however, that nominal wages are themselves not restrained to an even greater degree than food prices. With the widespread transformation of subsistence-based agriculture into commercial agriculture, and of subsistence landowners, or tenants, into dispossessed rural workers, the more likely outcome is declining wages and the narrowing of the food entitlements of the poor. Hence we arrive at what is by now a familiar conclusion in the literature on agricultural transformation and welfare in the Third World, which is that technological progress must be accompanied by institutional change that brings the fruits of that progress within the reach of poor peasants and workers.
Appendix Variables and their sources FDDEP: Food import dependency ratio. The ratio of food imports to the total food available for internal distribution. Data are for the period 1986-88. United Nations Development Programme, Human Development Report 1991, Oxford University Press, 1991. GRASUB: Grain substitution. Data are for the period 1960-65 and 1988. Food and Agricultural Organization, Production Yearbook, FAO, Rome, 1990. AGPROD:
492
Agricultural
productivity.
FAO, 1991.
The ratio of total cereal yields (kg) per ha. The data are for 1988. Food and Agricultural Organization, Production Yearbook, FAO, Rome, 1990. GNPPC: Gross national product per capita. Measured in US dollars for 1988. UNDP, Human Development Report 1991, Oxford University Press, 1991. FERDEP: Foreign fertilizer dependency. The ratio of fertilizer imports to total arable land. Data are for 1988. FAO, Production Yearbook and
Trade Yearbook,
FAO,
Rome,
COMM: Commercialization of agriculture. Ratio of the rate of growth of agricultural exports over the period 1969-88 to the index of agricultural production in 1988 (base year 197% 81.) FAO, Trade Yearbook and FAO, Product Yearbook, FAO, Rome, various issues. STAPLE: Staple good productivity change. Data are for 1990. FAO, Production Yearbook, FAO, Rome, 1991. STAPLE2: Staple good per capita production change. Data are for 1990. FAO, Production Yearbook, FAO, Rome, 1991.
FOOD POLICY December 1993
Donald G. Richards
Critics of the green revolution in agriculture have argued that the introduction of high-yielding varieties of seed and their requisite complementary inputs to the countries of the Third World have actually rendered these countries more food dependent than before. It is also argued that the internal results of this technology transfer have been increasing inequality in the distribution of income and growing malnutrition of the majority of the populations in these countries. The purpose of this paper is to examine empirically the relationships between so-called ‘grain substitution’ and several indicators of human welfare including malnutrition and child mortality. The study is based on cross-country data covering over 70 nations in the Third World and a time period extending from the early to mid1960s through 1969190. The results suggest a negative and statistically significant relationship between social welfare and the process of grain substitution. On the other hand, the data do not support the proposition that grain substitution is significantly related to levels of external food dependency. The author is Associate Professor, Department of Economics, Indiana State University, Terre Haute, IN 47809, USA (Tel: 812 237 2179; fax: 812 237 4349). The author wishes to thank Paul G. Burkett for helpful comments on this paper. Remaining errors are the responsibility of the author alone. ‘Gottfried
482
Haberler, lnfernational Trade continued on page 483
The relationship between agricultural structure, trade and food dependency has been the focus of growing theoretical and empirical debate in the social sciences for at least two decades. At issue is whether or not a country ought to engage in widespread production of agricultural output destined for export at the expense of its ability to achieve, or maintain, food self-sufficiency. Proponents of export-oriented agriculture typically invoke familiar arguments about the efficiency superiority of free trade.’ Specifically, it is argued that a country maximizes social welfare when it allocates productive resources according to the principle of comparative advantage and trades for those goods in which it is a relatively high-cost producer. The consequences for the productive structure of such a free-trading country typically imply a narrowing of the range of its productive activities relative to that which would result in a condition of autarky. This is not considered problematical inasmuch as the variety of the country’s consumption needs may more efficiently be met by imports. It is also sometimes argued that in the absence of trade certain sector-specific productive resources will remain unemployed due to the inadequacy of domestic demand for their associated final outputs. This ‘vent for surplus’ argument goes back as far as Adam Smith and has been advanced by Myint for the case of the less developed countries.2 Scepticism about the desirability of unfettered free trade from both a theoretical and an empirical perspective is as old as the arguments in its favour. In fact there is no debate in political economic discourse with a longer historical lineage than that concerned over the relative merits of free versus restricted trade. While the preponderance of professional opinion among mainstream economists seems to favour the free trade position there is substantial disagreement as to whether this should be extended to include food production and trade as readily as to most other lines of economic activity.3 Food is often thought to occupy a special position in the hierarchy of production values given its obvious nature as a fundamental necessary for human life and well-being. Few
0306-9192/93/060482-l
10
1993 Butterworth-Heinemann
Ltd
Grain substitution and food dependency
continued from page 482 and Economic Development, National Bank of Egypt Fiftieth Anniversary Commemoration Lectures, Cairo, 1959; A.K. Cairncross, Factors in Economic Development, George Allen & Unwin, London, 1962; Anne Kruegar, ‘Comparative advantage and development policy 20 years later’, in Moshe Syrquin, Lance Taylor and Larry Westphal, eds, Economic Structure and Performance: Essays in Honor of Hol/is B. Chenery, Academic Press, Orlando, FL, 1984. *H. Myint, ‘The classical theory of international trade and the underdeveloped countries’, Economic Journal, Vol 68, No 270, 1958. 3For a recent survey of the literature that discusses a variety of the controversial issues surrounding agriculture and international trade, see Simon Maxwell and Adrian Fernando, ‘Cash crops in the developing countries: the issues, the facts, the policies’, World Development, Vol 17, No 11, 1989, pp 1677-1708. 4William Schneider, Jr, ‘Agricultural exports as an instrument of diplomacy’, Food Policy, Vol 1, No 1, November 1975, pp 23-31. ‘Francis Moore Lappb and Joseph Collins, World Hunger: Twelve Myths, Grove Press, New York, 1986. ‘Michael Lipton and Richard Longhurst, New Seeds and Poor People, Johns Hopki($s9. University Press, Baltimore, MD, ‘David Barkin, Rosemary L. Batt and Billie Ft. DeWalt, Food Crops vs Feed Crops: Global Substitution of Grains in Production, Lynne Rienner, Boulder, CO, 1990.
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1993
in the Third World
societies are willing to forgo the capacity to produce basic foodstuffs in the interest of global economic efficiency. Recent discussion advocating the use of food as an international weapon makes abundantly clear the vulnerability of a nation given to excessive food dependency.4 Given the obvious desire on the part of most nations to maintain at least a modicum of food self-sufficiency, the relevant question then becomes the degree to which a given country ought to specialize its agriculture away from production intended for home consumption and towards that intended for export. Related to these concerns about the structural orientation of basic agriculture is the question of the impact of agricultural technology on food dependency, income distribution and social welfare. The failure of the so-called green revolution to deliver on its early promise to prevent periodic famine and to alleviate to any satisfactory degree widespread undernourishment for a significant portion of the world’s population has inspired a voluminous literature critical of the phenomenon. It is frequently argued that the introduction of high-yielding varieties (HYVs) has had the consequence of rendering the less developed countries more dependent on food imports at the same time as it has resulted in creating further inequalities in the distribution of income.’ As a result, many countries that have participated fully in the green revolution are nonetheless still characterized by widespread hunger, perhaps even to a greater degree than they would otherwise be if they had not introduced the miracle seeds. A common rejoinder to this criticism is that the green revolution technology itself should not be held responsible for the failure of countries to deal adequately with the distributional issues related to widespread poverty and undernutrition. In the absence of necessary institutional reforms, it is argued, the new technology cannot be expected to eliminate these social problems.6 It is also argued that the apparent failure of the green revolution derives from its insufficient application. In this light, the key to achieving reductions in poverty requires more thorough applications of the technology to include small landowners so as to increase their productivity, the latter being necessary and sufficient for increasing real wages. The purpose of the present paper is to empirically assess these contending perspectives. In particular, I wish to test the hypothesis that the prevelance of malnutrition in the world bears a meaningful relationship to the changing commodity structure of agriculture in the Third World. Attention will be paid to a particular radical critique of the green revolution offered by Barkin, Batt and DeWalt.’ The position of these authors is that the introduction of high-yielding varieties of grain from the developed countries has had the effect of distorting the structure of agricultural production in the less developed countries in such a way as to render them increasingly dependent on the former to provide them with their basic food needs. Moreover, this pattern of structural distortion has had the effect of increasing the levels of income inequality, poverty and malnourishment in the LDCs. In essence, the integration of the LDCs into the world commodity markets, via a process of internationalization of capital, has promoted a structure of domestic production that bears little relation to the consumption needs of the majority of their populations. Against this hypothesis I will test the competing one that the source of continuing rural misery in the Third World is the failure to raise
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Grain substitution and food dependency
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sufficiently the productivity of land and labour in agriculture.8 This is the perspective offered, for example, by Hayami and Ruttan.’ They argue that declining real wages in the LDCs are the result of rapid population growth, an expansion in the labour supply and a corresponding decline in the marginal productivity of labour. The solution to these problems is provided by a combination of labour-using, land-saving technology in the agricultural sector along with a growth in the demand for non-farm labour. The authors recognize that technical progress in the agricultural sector may in fact be capital-using and labour-saving, which would result in greater income inequalities. They argue, however, that there is nothing inherent in the green revolution technology itself that promotes this tendency. Rather, it is improper government policies that encourage an overuse of capital while the green revolution techniques are themselves actually scale-neutral.
Grain substitution and food dependency
‘In characterizing these hypotheses as ‘competing’ I do not wish to imply that Barkin, Batt and DeWalt, or other radical critics of the green revolution for that matter, entirely dismiss the importance of raising agricultural productivity levels as a means of combating hunger and malnutrition The difference between the two perspectives, as I see it, is largely a matter of the emphasis each wishes to attach to the relative importance of technology versus institutional change. ‘Yujiro Havami and Vernon W. Ruttan, ‘The green revolution: inducement and distribution’, Pakistan Development Review. Vol 23, No 1, Spring 1984, pp 37-63. “Barkin et al, op tit, Ref 7, p 12. “Ibid, p 20.
484
Central to understanding the effects of the green revolution in the LDCs is the phenomenon of grain substitution. Barkin et al describe the process of grain substitution as occurring when the share of one or more grains in a country’s overall production is increasing relative to other grains. lo Rather than reflect changing dietary habits of the majority of the population, however, grain substitution more often than not occurs in response to the increasing demand for meat and other non-traditional grains on the part of the middle and upper classes, uses of grain for industrial production, or increasing grain exports. The consequence for the poor majority is its further social and economic marginalization. In fact, the marginalization of the rural poor also occurs geographically insofar as poor tenants and other small producers are unable to compete for agricultural inputs, irrigation facilities and bank credit, and are forced to sell their land. In other cases, small, poorer producers are forced to occupy poorer, marginal lands that depend on rainfall for their water needs and are located far from storage and marketing facilities. The market disadvantages faced by the smallholding sector are often exacerbated by discriminatory government policies that favour large capital-intensive, agro-industrial interests. Such policies may take the form of direct subsidies and preferential credit terms for the latter. They may also take the form of state pricing policies that support the prices of the new grains while repressing the prices of traditional food staples. The latter is often viewed as desirous from the standpoint of pursuing a ‘cheap food policy’ necessary to support industrialization. Just as often, however, the result has been to force small producers to abandon the land entirely since domestic foodgrain production is no longer profitable.” Consequently the nation as a whole becomes increasingly food dependent on external sources and the nutritional levels of both rural peasants and urban workers deteriorate. In order to empirically assess the theoretical positions outlined here it is obviously useful to have some means to determine the degree to which the process of grain substitution has taken place in the LDCs in recent decades. The issue is a complicated one for a variety of reasons. First, the same grain may have a variety of uses, including the obvious one of providing a staple commodity for low-income groups. Corn, for example, is the dominant staple grain commodity for many countries in Latin America, but it also serves as an important source of feedgrain for
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Grain substitution and food dependency
in the Third World
the raising of livestock. The available data do not allow us to distinguish between these two uses of the commodity and, for that reason, merely measuring the comparative growth in its production may give a misleading impression of its relative contribution to meeting the food needs of the relevant countries. A second problem is, of course, that different countries make use of different grains as the basis for their respective staple commodities. While corn is the staple grain of choice in most of Latin America, rice, wheat and sorghum have this role in many parts of the Third World, including some Latin American countries. Care must be taken to identify the dominant foodgrain in particular country cases. Third, a way must be devised to represent the necessarily dynamic notion of grain substitution. Clearly a consideration of the comparative growth rates of various commodities is inadequate inasmuch as this approach in and of itself tells us nothing necessarily about the degree of grain substitution. The relative growth rates of production of commodities may be a function of the relative rates of growth of technical productivity associated with their cultivation and, as such, may not indicate anything in particular about structural change in the agricultural sector. Moreover, rapid growth in any particular line is not necessarily associated with a dominant absolute, or relative, position for a commodity in the agricultural sector. The particular measure of grain substitution that I wish to employ for the purposes of this study is expressed as follows: GRASUB
= log
(LGRTOTCR)ss (LGR/TOTCR)61_65
(I)
where GRASUB is the measure of grain substitution, LGR is the single largest grain commodity produced in a given year, and TOTCR is the total quantity of cereals produced in a given year. GRASUB is expressed then as the ratio of the proportion of total cereal production accounted for by the value in 1988 of the single largest category of grain production over the period 1961-65 to the average proportion of total cereal production accounted for by that same grain over that same period. Numerically, GRASUB ranges from zero to positive infinity. The smaller GRASUB is, the greater the amount of grain substitution that is presumed to have occurred. The rationalization for this interpretation of the variable is straightforward. The grain identified as the single largest category of grain production over the period 1961-65 is taken to be the most important staple food produced in the country prior to the realization of the effects of the green revolution. As such it constitutes the country’s single most significant ‘traditional crop’. GRASUB then measures the relative importance of this traditional crop in the overall structure of agriculture more than two decades later after the structural changes associated with the new technology have been felt. If these effects have been significant then we would expect the traditional crop to have been eclipsed by other cash crops and, hence, the value for GRASUB will be low. If little structural change in the commodity composition of agriculture has occurred, then we would expect the traditional crop to have maintained its relative importance and the corresponding value for GRASUB will approach, or perhaps even exceed, 1. It will be noted that GRASUB is not a perfect measure of grain substitution. The choice of one, rather than two or three, grains around
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1993
485
Grain substitution and food dependency
in the Third World Table 1. OLS results for Equation (1).
a,b.cindicate statistical significance at the 0.10, 0.05 and 0.01 levels, respectively.
Variable
Parameter estimate
INTERCEPT GRASUS AGPROD GNPPC GNP
0.0252 0.1770 -0.2729 0.8527 -0.3045
Dependent variable = FDDEP Standard error 1.6756 0.2565 0.2311 0.1453 0.0784
t-statistic 0.013 0.085 -1.161 5.866’ -3.886’
F(6, 67) = 7.260’ Adj R* = 0.3397
which to define traditional staple food production is somewhat arbitrary. Too wide a definition of traditional food production, however, runs the risk of reducing the ability of the measure to identify genuine grain substitution. A measure that includes two grains, for example, may account for the same proportion of total cereal production in each of the time periods under consideration. At the same time, however, it may fail to capture the possibility that a great deal of substitution of one of these constituent grains has occurred for the other. An obvious advantage of GRASUB is that it does not identify a specific grain, or grains, as the traditional staple crop across countries, recognizing that this will differ according to specific country and region. Also, GRASUB has a dynamic character inasmuch as it captures changes in the grain structure of agriculture rather than measuring such production at a particular moment in time.
Empirical analysis As discussed above, a salient hypothesis offered by the literature critical of the green revolution is that countries that have adopted the new technology have suffered increasing food dependency. In Barkin et al’s critique, the introduction of the new seeds by international agroindustrial corporations has led to grain substitution and increasing food dependency. On the other hand it is argued by proponents of green-revolutionstyle technical change that the failure of nations to achieve food self-sufficiency is due to the continuing low level of productivity in their agriculture. To assess these propositions the following one-equation mode1 is specified: FDDEP
“All variables are defined and data sources are provided in the Appendix. %egion dummy variables are also included in the estimation of Equation (2). 14Equation (2) is estimated in double-log transformation form. Incomplete information for some countries on some variables requires that some of the statistical estimations use less than the full sample of countries.
486
= a0 + arGRASUB a,GNP + u2
+ CQAGPROD
+ aaGNPPC
+ (2)
where FDDEP is a measure of food dependency, AGPROD represents agricultural productivity in cereal production, GNPPC is per capita gross national product, and GNP is the level of gross national product.12 The last two variables are included in the model to control for country-specific characteristics associated with country size and level of development.‘” Equation (2) is estimated by the technique of ordinary least squares using data for 90 LDCs. l4 Regression results for Equation (2) are given in Table 1. The results provided in Table 1 do not support the hypothesis that a high degree of grain substitution is associated with high levels of food dependency. The parameter estimate linking the two variables, fir, while not statistically significant, is positive. On the other hand, the
FOOD POLICY
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1993
Grain substitution
and food
dependency
in the Third World
Table 2. 3SLS results for Equation (2).
INTERCEPT
a,b,c indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
“It is interesting to note that essentially the same results are obtained when the dependent variable is replaced by one that measures the change in the level of food dependency over the period 1960-88. “The Hausman test of endogeneity is performed separately for each of the suspected endogenous variables and the null hypothesis of endogeneity cannot be rejected at the 0.12 level of statistical significance: J.A. Hausman, ‘Specification tests in econometrics’, Economefrica, Vol 46, 1978, pp 1251-1271. For a discussion of the three-stage least squares procedure, see A. Zellner and H. Theil, ‘Three-stage least squares: simultaneous estimation of simultaneous equations’, Econometrica, Vol 33, 1962, pp 54-78.
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1993
FDDEP
Endogenous GRASUB
-1.406
-2.435’
GRASUB
0.893
AGPROD GNPPC
a.094 6.195’
GNP FERDEP COMM
-4.279c
1.141 2.980’ -1.537
variables AGPROD 14.465’ 1.004 0.102 2.329b 1.771a 1 .767a
GNPPC 3.386’ 2.980’ 0.727 3.242’
System weighted R* = 0.4228
results do provide limited support for the competing perspective that explains food dependency in terms of lagging agricultural productivity. Once again, however, the test statistic does not indicate statistical significance. The only statistically significant results, in fact, suggest that food dependency is positively related to per capita GNP and negatively related to the level of GNP.15 These results are not surprising since a high level of GNP per capita is consistent with a high level of imports of luxury food items while a low level of absolute GNP is associated with small-country dependency on foreign trade. Consideration of the single-equation model given in the above equation raises some important theoretical as well as econometric issues. First of all, it is possible that simple ordinary least squares is an inappropriate estimation approach inasmuch as there exists the possibility of multicollinearity among the right-hand-side variables. In particular, it is to be expected that the level of agricultural productivity (AGPROD) and the level of gross national product per capita (GNPPC) bear a direct relationship to one another. It would also make sense to suspect a significant degree of collinearity between the degree of grain substitution (GRASUB) and AGPROD since the influence of the new agricultural technology is theoretically expected to result in increases in both variables. In general, theoretically, we would expect several variables expressed in Equation (2) to be functionally related to one another. A more appropriate estimation procedure would treat each of them as endogenous in a system of simultaneous equations. Towards this end the variables GRASUB, FDDEP, AGPROD and GNPPC are each treated as endogenous and the model is re-estimated via the technique of three-stage least squares (3SLS).16 In this version of the model each of the right-hand-side variables in Equation (2) is used as a regressor for each of the suspected endogenous variables. Two additional explanatory variables are included in the equation describing AGPROD. These are FERDEP, a measure of foreign fertilizer dependency, and COMM, a measure of the degree of commercialization of the agricultural sector. The motivation for such a specification is the interpretation of the last two variables as indicative of the introduction of the green revolution in the agriculture of the less developed countries. As such the theoretical expectation is that they will each be directly related to the level of agricultural productivity in the cerealproducing sector. The 3SLS estimation results are given in Table 2. For the equation that describes food dependency (FDDEP) the results in Table 2 are virtually identical to those obtained by OLS and presented in Table 1. Again we note that FDDEP bears an inverse relationship to both the degree of grain substitution and agricultural productivity. In neither of these cases, however, is the relationship
487
Grain substitution and food dependency
in the Third World
statistically significant. The levels of gross national product and GNP per capita are significantly related to FDDEP, confirming the OLS results. The signs on these parameters suggest that richer and smaller countries are more likely to be food dependent than poorer and larger ones. That smaller countries tend to be more food dependent than larger ones makes intuitive economic sense for the same reasons that suggest the greater trade dependency of small nations in general. The equation explaining GRASUB itself suggests that it is more likely to be the poorer countries (as measured by GNP per capita) of the Third World that are more likely to have embarked on the process of grain substitution. A possible interpretation of this result is that such poor countries have felt a greater compulsion to seek profound agricultural transformation as a solution to their poverty. Also notable is the negative sign attached to GNP in this equation. Though the corresponding t-statistic is too small to indicate significance, the sign suggests that it is the larger countries (in terms of GNP) in the sample that have engaged in greater grain substitution. The results for the equation describing overall productivity in the cereal-producing sectors (AGPROD) indicate that the two additional variables serving as proxies for the effects of the green revolution (FERDEP and COMM) are each positive in their influence and significant at the 0.10 level. Once again we also note evidence that larger countries seem to enjoy higher levels of sectoral efficiency than smaller 0nes.l’ As noted earlier, the critical perspective on the green revolution and grain substitution argues that whether or not advances in factor productivity are associated with the introduction of the HYV seeds, the new technology has not resulted in widespread improvements in nutrition levels for the majority of the poor populations of the adopting countries. The relationship between grain substitution and these welfare concerns might be expressed in the form of the following model: WEL
= PO + PiGRASUB l&GNP +
“The regression model was also estimated disaggregating the data set both by geographical region as well as by level of development. In general the results are very similar to those obtained for the full sample. Detailed results are available from the author upon request.
488
+ P,AGPROD
+ P,GNPPC
+ (3)
~3
In Equation (3) the left-hand-side variable is some measure of societal welfare related to hunger and malnutrition while the right-hand-side variables have the same meanings as earlier. As specific measures of the dependent variables we may consider a number of plausible alterna.tives. Three, in particular, for which there exist data on a relatively large number of LDCs are the percentage of under-weight children under 5 years of age (MAL), the under-5 mortality rate per 1000 live births (MORT) and the daily calorie supply as a percentage of requirements (CAL). The working hypothesis is that both GRASUB and AGPROD relate negatively to the first two of these and positively to the third. The OLS estimates for the three versions of Equation (3) are given in Table 3. The results in Table 3 are interesting inasmuch as they suggest that both high degrees of grain substitution and low productivity in agriculture are related to high levels of child malnutrition in the Third World. Also, and not surprisingly, high levels of malnutrition are inversely related to the level of GNP per capita. Larger countries are more likely to be characterized by high levels of malnutrition than smaller ones. Each of these results is significant at a reasonable level of statistical reliability. With respect to the other measures of nutritional well-being, MORT and CAL, the direction of the hypothesized relationships
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Grain substitution and food dependency
in the Third World
Table 3. OLS results for Equation (3).
MAL
*,m indicate statistical significance at the 0.10, 0.05 and 0.01 levels, respectively.
Dependent variables MORT
CAL
INTERCEPT GRASUB AGPROD GNPPC GNP
8.061’ -1.923= -3.028’ -13.572’ 16.759’
4.732’ XI.289 -2.442b -13.890’ 16.482’
13.720’ 0.340 1.72V 8.146’ X1.160
F-stat Adj R2
101.33c 0.9276
63.153’ 0.8439
14.342’ 0.5230
between these variables and the independent variables is confirmed. They are statistically significant, however, only in the case of AGPROD, while the overall explanatory power of the models is reduced as compared to the previous version. Hence, while there is some statistical support for the critical view that grain substitution is associated with the nutritional immiseration of poorer countries, the above results underline the importance of the association between nutritional levels and agricultural productivity. Statistical association does not, of course, establish causality. Nonetheless, theoretical intuition would seem to suggest that high and, perhaps more importantly, increasing levels of agricultural productivity are at least necessary keys to rising levels of nutrition for poor nations. At the same time we should not discount the observation made by critics of the green revolution ** that productivity advances made in particular subsectors of LDC agriculture are consistent with lagging, or declining, conditions in other food-producing sectors. This is the view that is commonly referred to as agricultural dualism. l9 Of particular concern is the growth of productivity in sectors producing food staples for domestic consumption. In this regard it would be interesting to investigate the relationship between the change in the structure of agricultural production and the productivity of domestic staple goods production. Is the technical dynamism associated with widespread grain substitution transmitted to the staple goods sector of the LDCs, or does it result in agricultural dualism whose consequence is the marginalization and neglect of the latter sectors? The following model attempts to shed light on this question. STAPLE “Keith Griffen, The Political Economy of Agrarian Change: An Essay on the Green Revolution, Harvard University Press, Cambridge, MA, 1974; Alain de Janvry, The Agrarian Question and Reformism in Latin America, Johns Hopkins University Press, Baltimore, MD, 1981. ‘qhe dual character of agriculture, as de Janvry notes, does not imply that the two sectors are autonomous of one another in the manner described by Schultz and Lewis: T.W. Schultz, Transforming Traditional Agriculture, Yale University Press, New Haven, CT, 1964; W.A. Lewis, ‘Economic development with unlimited supplies of labour’, Manchester School of Economic and Social Studies, Vol 22, 1954, pp 139-191. Rather they are functionally related insofar as the food-producing sector produces the wage goods that sustain the rural and urban working class.
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= p. + piGRASUB P,GNP
+ ~4
+ pzAGPROD
+ p3GNPPC
+ (4)
In Equation (4) the dependent variable, STAPLE, represents the change in the productivity of staple good production and is expressed as follows: STAPLE
= log
W/HA901 (KG/H&-&
where KG/HA (kg per ha) is the land productivity associated with the single most important staple grain commodity over the period 196165. Hence STAPLE represents the change in this productivity over the period 196165 up to 1990. The right-hand-side variables have the same meanings as before. The OLS estimation results are given in Table 4. The results in Table 4 do not support the view that grain substitution has had an adverse effect on productivity growth in staple good production. In fact we find a negative and statistically significant
Grain substitution and food dependency
in the Third World Table 4. OLS results for Equation (4).
abc indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
Variable
Parameter estimate
INTERCEPT GRASUB AGPROD GNPPC GNP
-2.3293 -0.2235 0.2841 0.0885 -c.o005
Dependent variable = STAPLE Standard error 0.9405 0.1289 0.1156 0.0658 0.0356
t-statistic -2.47? -1.734a 2.457b 1.345 -0.709
F(6, 79) = 2.024 Adj R” = 0.0722
relationship between GRASUB and STAPLE. Perhaps more significant is the positive relationship between overall agricultural productivity and the change in staple goods productivity. Overall, then, the cross-country evidence supports the view that the technical progress associated with the green revolution, and the accompanying process of grain substitution described by Barkin et al, are consistent with rising levels of agricultural productivity, including productivity in the staple goods producing sectors of the LDCs. This evidence would seem to suggest that the process of grain substitution does not imply a worsening of a country’s ability to provide itself with adequate levels of staple goods production to meet its basic food needs. In fact, as long as the rate of productivity advance in the staple goods sector is sufficiently large, a country may be able to produce sufficient amounts of its basic foodgrain to meet the needs of its expanding population on a constant, or even a diminishing, land area. To test the relationship between grain substitution and a country’s ability to produce adequate levels of its basic staple crop, the model given in Equation (4) is respecified, substituting for the dependent variable, STAPLE, a new variable, STAPLE2, that measures the ratio of per capita good production in 1990 to per capita staple good production in 1963. ‘Staple good production’ is defined in this respecification in the same manner as it is in the definition of STAPLE. The OLS results for this respecified model are given in Table 5. The results given in Table 5 give strong support to the argument that grain substitution has negative consequences for the ability of countries to maintain high levels of production of their staple grain on a per capita basis. The results in Table 5 also support the claim that countries’ ability to meet these staple goods needs is strongly tied to the level of overall productivity of land. Comparing the results in Table 5 with those in Table 4, then, suggests that while grain substitution does not prevent countries from achieving high levels of productivity in their staple goods production, it does impinge on their ability to maintain high per capita levels of production of those same goods. A further implication of the comparison of these results is that rising productivity is a necessary, but
Table 5. OLS results for Equation (5).
ab.c indicate statistical significance 0.05 and 0.01 levels, respectively.
at the 0.10,
Variable
Dependent variable = STAPLE2 Parameter estimate Standard error
t-statistic
INTERCEPT GRASUB AGPROD GNPPC GNP
-4.7660 0.9788 0.5191 0.1029 0.0023
-4.748’ 7.11oc 4.191c 1.479 0.062
1.0037 0.1377 0.1239 0.0695 0.0381
F(6, 82) = 16.393 Adj R* = 0.5297
FOOD POLICY
December
1993
Grain substitution and food dependency
not sufficient, production.
condition
for high
levels
of per
capita
in the Third World
staple
goods
Summary and conclusions
“Amartya Clarendon
Sen, Poverty and Famines, Press, Oxford, UK, 1981.
FOOD POLICY
December
1993
The empirical results of the present study offer an interesting, though ambiguous, picture of the relationship between the forces of international trade, agricultural transformation and nutritional status in the Third World. On the one hand there appears to be no significant relationship between the process of grain substitution and the condition of food dependency across the less developed countries. Rather, food dependency is better explained by the variables gross national product and gross national product per capita, with small and richer countries tending to greater dependency than larger and poorer ones. Neither does it seem to be the case that grain substitution has negative effects on the technical progressivity of staple goods production. On the contrary, the evidence shows a direct and significant relationship between these variables. Perhaps more to the point, staple goods productivity bears a positive relationship to overall agricultural productivity across nations. By themselves these results would seem to strongly contradict the radical critique of the effects of the green revolution on subsistence agriculture. However, the results present here also indicate some support for the radical view that the process of grain substitution is associated with both high levels of malnutrition and low levels of staple goods production per capita. Is it possible to reconcile the apparent contradiction raised by these results? I believe that the answer is yes. Reconciliation resides in the fact that the process of grain substitution has resulted in the increased marginalization, and in some cases dispossession, of the small peasant producer. The agricultural transformation that has accompanied the green revolution, while stimulating the introduction and dissemination of new grains in the less developed countries, has also had an important transformative effect on the traditional goods-producing sector. While prior to the influence of the green revolution much of the production of food staples lay in the domain of small (often subsistence) production, with the rise in land values associated with the new technology many peasant producers were forced off the land and into the rural labour force. In this manner the production of even traditional crops became associated with wealthy agro-industrial enterprises that were able to acquire increasingly expensive lands and to afford the expensive input package associated with the modern technology. The difficulty in providing further econometric support for this theoretical interpretation of the present results is the lack of adequate cross-national data on the effects of the green revolution on the distribution of income and agricultural assets. This obstacle underlines the limitations of the present methodological approach and suggests that further investigation requires that the issue be examined at the level of those individual countries or regions for which the requisite data exist. Nonetheless the present results are consistent with the view that continuing malnutrition in the Third World is, to use Sen’s expression, a failure of food entitlements rather than a failure to raise agricultural productivity.20 It might be argued that the green revolution technology broadens the
Grain substitution and food dependency in the Third World
food entitlements of even the landless poor in the less developed countries insofar as it results in restraining food prices and thereby augmenting the real wages of rural and urban workers. This assumes, however, that nominal wages are themselves not restrained to an even greater degree than food prices. With the widespread transformation of subsistence-based agriculture into commercial agriculture, and of subsistence landowners, or tenants, into dispossessed rural workers, the more likely outcome is declining wages and the narrowing of the food entitlements of the poor. Hence we arrive at what is by now a familiar conclusion in the literature on agricultural transformation and welfare in the Third World, which is that technological progress must be accompanied by institutional change that brings the fruits of that progress within the reach of poor peasants and workers.
Appendix Variables and their sources FDDEP: Food import dependency ratio. The ratio of food imports to the total food available for internal distribution. Data are for the period 1986-88. United Nations Development Programme, Human Development Report 1991, Oxford University Press, 1991. GRASUB: Grain substitution. Data are for the period 1960-65 and 1988. Food and Agricultural Organization, Production Yearbook, FAO, Rome, 1990. AGPROD:
492
Agricultural
productivity.
FAO, 1991.
The ratio of total cereal yields (kg) per ha. The data are for 1988. Food and Agricultural Organization, Production Yearbook, FAO, Rome, 1990. GNPPC: Gross national product per capita. Measured in US dollars for 1988. UNDP, Human Development Report 1991, Oxford University Press, 1991. FERDEP: Foreign fertilizer dependency. The ratio of fertilizer imports to total arable land. Data are for 1988. FAO, Production Yearbook and
Trade Yearbook,
FAO,
Rome,
COMM: Commercialization of agriculture. Ratio of the rate of growth of agricultural exports over the period 1969-88 to the index of agricultural production in 1988 (base year 197% 81.) FAO, Trade Yearbook and FAO, Product Yearbook, FAO, Rome, various issues. STAPLE: Staple good productivity change. Data are for 1990. FAO, Production Yearbook, FAO, Rome, 1991. STAPLE2: Staple good per capita production change. Data are for 1990. FAO, Production Yearbook, FAO, Rome, 1991.
FOOD POLICY December 1993