In today’s agriculture, the relationship between markets and technology plays a crucial role, but it’s not a straightforward one. Markets and technologies don’t dictate how farms operate, but rather offer opportunities for different ways to organize farming. This flexibility, or “space for manoeuvre,” allows farmers to make strategic decisions that suit their specific needs. Understanding how to navigate these relationships is key for both seasoned farmers and newcomers looking to optimize their operations. Let’s break it down into simple, actionable insights.
1. Understanding the Relationship Between Markets and Farms
Farmers engage with markets in two primary ways: downstream and upstream relationships.
- Downstream relations involve selling farm products to the market. Once a farm produces more than it needs for its own consumption, it enters a market system. Historically, nearly all farms needed to sell a surplus for various necessities like paying taxes or purchasing goods they couldn’t make themselves.
- Upstream relations are about the inputs farmers need, like land, labor, or fertilizers. Farms can either produce these inputs themselves or purchase them from external markets.
Some farms operate more independently from markets, producing many resources themselves. Others buy more from the market, creating different levels of reliance on external factors. The degree to which a farm is dependent on purchased resources is called commoditization.
Actionable Tip:
Evaluate what proportion of your farm’s resources are produced internally versus bought from the market. This will help you understand where you can reduce costs or risks by increasing self-sufficiency.
2. Commoditization: Buying vs. Producing In-House
Commoditization refers to how much of a farm’s resources are bought instead of produced on-site. The higher the commoditization, the more dependent the farm is on market prices and external risks. For example, buying animal feed instead of producing it internally can expose a farm to market volatility.
Farms that rely heavily on external inputs are categorized as entrepreneurial farms, while those that produce most of their own resources are called peasant-like farms. Both systems have their benefits, but the key is balancing externalization (buying resources) with internal production.
Actionable Tip:
Analyze your farm’s commoditization. If you’re heavily dependent on the market, explore ways to bring some production back in-house to reduce vulnerability to price fluctuations.
3. Managing Market Risks
When a farm increases its reliance on external markets, it also takes on market-related risks. If prices for inputs rise but the price for outputs remains the same, it can squeeze the farm’s profit margins. On the flip side, a favorable market can boost profits significantly.
Farms can diversify their market risks by balancing internal production with external buying. This is akin to having multiple revenue streams, where not all of your resources depend on fluctuating market prices.
Actionable Tip:
Diversify your sources of farm inputs. Consider producing some inputs like fodder, or negotiating long-term contracts with suppliers to stabilize prices.
4. The Make-or-Buy Decision: Strategic Choices
The concept of “make or buy” is a strategic decision every farm faces. This decision hinges on two factors: transaction costs and governing costs.
- Transaction costs are the expenses involved in buying something from the market, including researching the best suppliers or managing risks from poor-quality products.
- Governing costs come into play when you decide to produce a resource in-house. While it saves on transaction costs, it adds complexity to managing and coordinating production.
Each farm must weigh the balance between these costs to make the best decision for its specific needs.
Actionable Tip:
Create a cost analysis to compare the transaction costs of buying inputs with the governing costs of producing them yourself. This will help you make informed decisions on whether to “make” or “buy.”
5. Technology and its Role in Farm Operations
Technology plays a dual role in agriculture: it can simplify processes, but it can also introduce dependency. Farms can selectively adopt technologies that fit their strategic goals or avoid technologies that could limit their autonomy. Technologies, whether mechanical or skill-oriented, need to be evaluated based on their long-term value and how they integrate with the farm’s style of farming.
Actionable Tip:
Adopt technologies that enhance your farm’s efficiency without creating over-dependency. Start small with innovations and scale up based on real-world results.
6. Craftsmanship and Entrepreneurship: Finding the Right Balance
Farming isn’t just about maximizing profits; it’s also about preserving skills, heritage, and craftsmanship. Some farmers choose to externalize less and focus more on maintaining traditional methods that align with their values and community. Others might take a more entrepreneurial approach, leveraging markets and technology to maximize efficiency and output.
Finding the right balance is crucial and varies from farm to farm. There is no “one size fits all” approach in agriculture.
Actionable Tip:
Reflect on your farm’s values and long-term goals. Are you aiming to maintain traditional methods, or are you looking to innovate and expand? Align your market and technology choices with your overall farm philosophy.
Conclusion: Key Takeaways for Agriculture Enthusiasts
- Understand your market relationships: Know the difference between downstream (selling) and upstream (buying) relations.
- Balance commoditization: Don’t become overly dependent on buying inputs from the market.
- Mitigate risks: Diversify input sources and manage market risks effectively.
- Make or Buy: Weigh the costs of producing in-house versus buying from external markets.
- Adopt technology wisely: Implement technology that supports long-term sustainability without creating unnecessary dependency.
- Preserve craftsmanship: Balance efficiency with traditional farming methods that align with your values.
These tips provide a foundation for navigating the complex world of markets and technology in agriculture. Finding the right balance can unlock new opportunities for growth and sustainability in your farming operations.
Bullet Points for Canva Infographic:
- Downstream (selling) and upstream (buying) relations are key market interactions.
- Commoditization = farm’s reliance on market-bought resources.
- Mitigate market risks by balancing internal production with external buying.
- “Make or Buy” decision: Weigh transaction costs vs. governing costs.
- Technology: Choose innovations that support long-term farm goals.
- Preserve craftsmanship while adapting to market opportunities.
Changing Schemes of Reproduction in Agriculture
In farming, the concept of externalization refers to the reliance on external resources purchased from markets, rather than producing those resources on the farm. The degree of externalization varies, impacting how farms reproduce resources for future production cycles. Let’s break down two distinct schemes of reproduction based on the degree of externalization, and how they affect the farm’s operation.
1. Low Degree of Externalization: Autonomy in Reproduction
In situations where there is a low degree of externalization, most resources used in farming are produced or reproduced within the farm or the local community. These are considered non-commodities, meaning they don’t have to be bought from the market. The farm operates in a way where each production cycle builds upon the previous one, creating a self-sustaining system.
Key Features:
- Self-sufficient resource cycle: Most of the resources needed for production are available within the farm, such as feed, seeds, or manure.
- Partial market interaction: While a portion of the farm’s output is sold on the market, it’s not fully dependent on external inputs.
- Reinvestment: Some money earned from selling surplus produce is used to acquire extra resources, but these become part of the farm’s future cycles as “already paid for,” further strengthening autonomy.
Outcome:
This system allows farms to interact with markets while maintaining a level of independence. It provides a more stable and predictable production cycle, as the farm’s output is not entirely reliant on fluctuating market prices.
Actionable Tip:
Focus on increasing internal resource production (e.g., grow your own feed or compost) to reduce dependency on external market inputs. This will make your farm more resilient to market changes.
2. High Degree of Externalization: Market Dependency
On the other hand, farms with a high degree of externalization rely heavily on the market for acquiring necessary resources like seeds, feed, and fertilizers. This creates a situation where the farm’s reproduction scheme becomes market-dependent, meaning that future production cycles hinge on buying resources rather than producing them.
Key Features:
- Reliance on external inputs: Most of the resources used in production are bought from the market, making the farm more vulnerable to price changes.
- Market-driven production: The farm’s survival and reproduction are tightly linked to its ability to sell products at competitive market prices, while managing the cost of inputs.
- Less autonomy: Since most of the resources are purchased, the farm has less control over production costs, which can fluctuate based on market conditions.
Outcome:
Farms in this scheme are more exposed to market risks, such as price volatility or supply chain disruptions. This model can offer growth opportunities, but also requires careful financial management and strategic decision-making to stay competitive.
Actionable Tip:
If your farm is highly dependent on external inputs, consider diversifying your suppliers or negotiating long-term contracts to stabilize prices. This can help reduce the unpredictability that comes with market dependency.
3. Balancing Market Interactions and Farm Autonomy
In both schemes, markets play a role in determining a farm’s output. However, the key difference lies in how much the farm depends on those markets.
- In low externalization systems, the farm controls its own resource cycles and interacts with the market primarily as an outlet for selling surplus produce. This allows the farm to strategize its engagement with markets based on its needs and goals.
- In high externalization systems, the market becomes the driving force behind not only sales but also the acquisition of resources, making the farm more vulnerable to external economic pressures.
Actionable Tip:
Strategize your farm’s relationship with the market. For greater resilience, aim for a balance where you can leverage markets for growth without becoming too dependent on external inputs.
4. The Role of Collective Memory and Cultural Repertoire
Farming households that operate with low externalization often draw from collective memory and cultural practices. These practices have been passed down through generations, helping farmers maintain a certain level of autonomy. For instance, traditional methods of crop rotation, seed saving, or livestock management are examples of how culture and memory play a role in farm sustainability.
Actionable Tip:
Tap into traditional farming knowledge that may be unique to your community or region. These methods can help enhance farm autonomy and reduce reliance on costly external inputs.
Conclusion: Key Takeaways for Farmers
- Low externalization: Prioritize internal resource production to increase autonomy and reduce market risks.
- High externalization: Strategically manage market interactions and input costs to avoid over-reliance.
- Balance is key: Aim to leverage markets for growth, but maintain a level of independence through self-produced resources.
- Cultural practices matter: Utilize traditional farming methods to support long-term sustainability.
Summary for Infographics:
- Low externalization: Greater autonomy, fewer market dependencies, more stable production cycles.
- High externalization: Increased reliance on markets, higher vulnerability to price fluctuations.
- Reinvestment: Profits from surplus sales can boost future production by funding necessary resources.
- Collective memory: Traditional methods enhance autonomy and reduce the need for market inputs.
- Balance your strategy: Engage with markets strategically, but don’t over-rely on external resources.
Text Box 3.1: Hay or Butter (and How Much Butter)?
Historically, markets for hay have played an important role, especially for those requiring large quantities, such as armies and breeding farms. However, producing and selling hay, particularly on dairy farms, was a complex economic decision. Farmers often faced a trade-off between selling hay for quick cash and using it to produce milk and butter, which could lead to better long-term returns.
In regions like Friesland in the Netherlands, selling hay was strongly discouraged. The local laws prohibited hay exports because it was seen as more valuable when used internally on farms to produce butter, thereby increasing wealth. Over time, this practice became part of the moral economy—a good farmer was not supposed to sell hay, as it indicated poor farm management.
This principle extended to other resources as well. Farmers were advised to feed quality hay to calves and heifers rather than using the best for immediate butter production. Prioritizing short-term gains from selling hay or feeding all good hay to dairy cows could damage the future quality of the herd. Thus, even when producing a commodity like butter, non-commodity considerations (i.e., balancing production and reproduction) shaped farming decisions.
Balancing Market and Farm Autonomy
The shift from autonomous reproduction (low externalization) to market-dependent reproduction (high externalization) reflects a transformation in how farms relate to markets. In low-externalization settings, farms rely largely on self-produced resources. These farms engage with markets primarily to sell surplus production but retain a degree of autonomy by keeping key inputs in-house.
On the other hand, high externalization schemes rely heavily on market-purchased inputs. These farms are subject to market forces for both inputs and outputs, making them more vulnerable to market fluctuations. As the farm becomes more integrated with the market, the market becomes the ordering principle for the farm’s production, leading to increased risks and higher transaction costs.
Text Box 3.2: Transaction Costs and Buying Hay
Buying hay is not as straightforward as it seems. While there is a global market for hay, purchasing it comes with significant transaction costs. These costs are related to the risks associated with buying anonymous hay, which could be contaminated or of poor quality. For example, hay might have been treated with pesticides, posing risks to livestock and possibly contaminating milk production.
In addition to the direct costs of hay, farmers face hidden transaction costs such as the time spent verifying the quality of the hay or the cost of purchasing certified hay. These extra costs highlight the dangers of buying unknown resources and emphasize the value of local knowledge and self-produced inputs.
Local farming traditions often stress the importance of using locally produced resources. A famous saying, “moglie e buoi, paesi tuoi” (choose a wife and oxen from your own village), reflects the accumulated wisdom that local resources are more trustworthy. Locally sourced goods are preferred because they come with lower transaction costs and fewer risks than buying from distant or unknown sources.
Implications for Farmers
Farmers must carefully weigh the costs and benefits of selling or buying resources like hay. The moral economy of farming communities often discourages selling key resources, like hay, that are crucial for sustaining future production. Instead, they emphasize the importance of maintaining a balanced farm where immediate profits do not undermine long-term reproduction.
At the same time, farmers operating in highly market-dependent systems face increasing risks and uncertainties as they integrate into larger markets. They must manage the balance between production and the costs of external inputs, while also mitigating the risks of fluctuating market conditions.
A Self-Controlled Resource Base
A key distinction between the scenarios depicted in Figures 3.2 and 3.3 lies in the concept of a self-controlled resource base. In Figure 3.2, the farm relies on its own resources, accumulated through previous production cycles, offering a level of autonomy from external markets. This base comprises various assets: seeds saved from the last harvest, livestock raised on the farm, stored hay, family labor, and social networks with neighbors and traders. Over time, this resource base has been carefully built and maintained, often across generations, becoming a critical part of the farm’s sustainability and resilience.
This self-controlled resource base acts as a form of insurance, especially in difficult times. Farmers can depend on their own resources to weather crises, such as poor harvests or market downturns, without being wholly reliant on external markets for essential inputs. This ability to self-insure reinforces a sense of confidence and self-sufficiency, though the unpredictability of nature always plays a role. By contrast, farmers in market-dependent scenarios (Figure 3.3) must rely on external resources, making them vulnerable to market fluctuations and higher transaction costs.
Text Box 3.3: Facing a Hostile Environment
In animal husbandry, having enough feed and fodder of high quality represents an essential part of a farm’s self-controlled resource base. It serves as insurance during harsh conditions, as illustrated by a saying from Ireland: “A good abundance of quality hay was like an insurance policy for those who lived off the land.” This local wisdom underscores the importance of a well-stocked farm that can sustain production through difficult weather conditions.
Even with a well-managed resource base, uncertainties remain. Bad weather, health issues, or market problems can erode a farm’s resources. However, a self-controlled base provides the means for a gradual recovery. In contrast, farms that rely heavily on external markets for resources are much more vulnerable; if prices drop or a harvest fails, they are left with deficits, and recovery is contingent on external factors.
Iron: The Seeming Exception
The need for iron-based tools and machinery (from basic implements to advanced tractors) seems like an exception to the otherwise self-sufficient resource base of a farm. Iron tools cannot be produced on the farm and must be purchased. This introduces commodity relations into the farm economy and requires interactions with markets for their acquisition and upkeep.
However, even with machinery, farmers have options for reducing dependency on external markets:
- Hiring custom workers: Some farmers outsource tasks that require machinery to specialized workers or enterprises, paying standard market rates. This represents a higher level of externalization.
- Owning machinery: Farmers can invest in their own equipment, which offers more control but requires significant capital. There is a notable difference between buying machinery outright with savings (turning it into a non-commodity once acquired) and purchasing it on credit, which brings with it ongoing financial obligations such as interest payments.
- Secondhand equipment: Acquiring used machinery can significantly reduce initial costs and mitigate the risks associated with high levels of investment.
- Sharing machinery: Through cooperatives like CUMA in France (Cooperative for the Use of Agricultural Equipment), farmers can collectively buy and share machinery, reducing the overall financial burden while still ensuring timely access to necessary tools.
These strategies demonstrate how farmers can manage their relationship with the market even when they must rely on external resources like machinery. Proper maintenance and repair of machinery, sharing costs with other farmers, and buying secondhand are all ways to mediate the impacts of commodity relations on farm operations.
Mechanization and Autonomy
While iron-based tools and machinery introduce a degree of market dependency, they do not necessarily undermine a farm’s autonomy. Farmers can integrate mechanization into their reproduction cycle without becoming overly reliant on external markets, as long as they manage the process carefully. By minimizing costs through savings, engaging in cooperative agreements, and maintaining equipment effectively, farmers can maintain a balance between mechanization and their historically autonomous farming practices.
In short, iron is not an insurmountable exception to farm autonomy. While it facilitates market integration, its effects can be mitigated through careful management, resourcefulness, and cooperation with other farmers. This demonstrates the agency of farmers in shaping how mechanization fits into their broader strategies for maintaining a resilient and self-controlled farm system.
Locally adapted technologies generally fit better within the existing farm systems, as they are shaped by the specific conditions of the local environment. Because they evolve alongside traditional practices, they require fewer changes to the farm’s infrastructure, resulting in reduced transaction or transformational costs. These technologies often build on the tacit knowledge and skills farmers have developed over generations, making them more integrated into the natural and cultural rhythms of the farming community. Such technologies are also more likely to be flexible, allowing farmers to adjust their use based on changing conditions or unexpected challenges.
By contrast, universally applicable technologies, like those from the Green Revolution, assume a certain set of standardized conditions to function optimally. They often require higher inputs, such as fertilizers and pesticides, as well as modifications to farm structures (such as field layouts, irrigation systems, or storage facilities). These technologies, while offering the potential for large productivity gains, may demand significant investment and restructuring. They come as part of a broader technological package that shapes not only the farm’s physical layout but also the labor processes and social relations within the farm. Farmers may face increased dependencies on external suppliers and services as they adopt these technologies, leading to changes in their autonomy and financial stability.
In the broader context of farming, the choice between locally adapted and universally applicable technologies reflects deeper dynamics of control, autonomy, and the direction of development. Locally adapted technologies often support more sustainable and resilient farming systems, while universally applicable technologies may drive farms towards greater integration into global market systems, sometimes at the cost of local knowledge, environmental balance, and independence.
The transition from locally adapted to universally applicable technologies often leads to increased market dependency and significant shifts in the organization of farming systems. As shown in the case of potato seedlings in the Andean mountains (Text Box 3.5), traditional, locally adapted breeding methods align with the unique ecological and socio-economic conditions of smallholder farms. In these systems, farmers select varieties that best fit their diverse and evolving field conditions through a continuous process of trial and error. This results in varieties that are finely tuned to local ecosystems and cultural preferences, evolving alongside the fields themselves (Figure 3.5).
In contrast, scientifically designed varieties (often developed under Green Revolution programs) bring a different approach. These new genotypes are created with the assumption of standardized, ideal conditions—such as optimal nutrient levels, water supply, and mechanical inputs—all of which may not be present in real-world farms. For these varieties to succeed, farms must be restructured to meet the specific growth factors required by the new seedlings (Figure 3.6). This involves costly adjustments, such as increased use of fertilizers, irrigation systems, and mechanization. Without meeting these conditions, the new varieties will underperform and may even degenerate rapidly. The need to modify the farm’s structure and operations to accommodate these new varieties often brings about significant additional costs, referred to as transformational costs.
The key difference between locally adapted and scientifically designed technologies lies in their respective approaches to agricultural development. Traditional, locally adapted technologies evolve gradually, with farmers making small, incremental improvements based on their knowledge of local ecosystems. In contrast, scientifically designed technologies introduce a set of rigid requirements that must be met all at once, creating a higher degree of dependency on external inputs and markets. This shift from localized, skill-based farming systems to external, market-driven systems often leaves farmers vulnerable to new dependencies, increasing their reliance on expensive inputs, machinery, and labor during peak periods.
The rise in market dependency can have profound effects on farm organization and sustainability, as Hebinck (1990) and others have shown. In many cases, farmers become locked into a cycle of purchasing inputs and services to maintain the high-performance levels promised by new technologies, which leads to greater financial pressures and reduced autonomy.
In some cases, however, farmers have found ways to creatively recombine elements from both traditional and modern technologies, as illustrated in Figure 3.7. By selecting specific elements from universally applicable technologies and integrating them with local practices, farmers can create hybrid systems that offer the benefits of modernization without the full range of dependencies. In this way, a balance between local knowledge and external technologies can be achieved, offering new opportunities for innovation while maintaining the integrity of traditional farming systems.
The comparison between the Low-Cost Farm and the High-Tech Farm illustrates the broader debate over the economic and social implications of technological change in agriculture. These two farm models, representing peasant-like agriculture and entrepreneurial agriculture, highlight the contrasting approaches to production, markets, and technology within modern farming systems.
The Space for Manoeuvre in Markets and Technologies
Farmers navigate a “space for manoeuvre” between market relationships and technological choices (Figure 3.8). The horizontal axis in this space refers to the level of market dependency, where farms may operate with considerable autonomy or become highly dependent on market inputs and credits. The vertical axis reflects the types of technologies applied, ranging from skill-oriented and locally adapted methods to mechanical and universally applicable technologies.
In this multidimensional space, different farming styles emerge, creating a spectrum from peasant-like to entrepreneurial agriculture. Peasant agriculture emphasizes self-sufficiency, local adaptation, and low market dependency, while entrepreneurial agriculture relies on market-driven inputs, advanced technologies, and economies of scale. Technological change, particularly through the adoption of high-yielding varieties and mechanization, tends to push farms from low-market dependency and skill-oriented technologies to a higher degree of market reliance and mechanized systems. This shift is associated with rising costs of inputs, machines, and credit dependence.
Case Study: Low-Cost vs. High-Tech Dairy Farms
The comparative study between Low-Cost Farm and High-Tech Farm in the Netherlands exemplifies these dynamics. Both farms aimed to provide the same income with comparable working hours, but their technological approaches varied significantly.
- Low-Cost Farm: This farm model utilized skill-oriented technologies, robust cattle breeds (Montbéliardes), and simpler, low-cost infrastructure. It emphasized efficiency in labor and minimal reliance on external inputs, producing around 400,000 kg of milk annually.
- High-Tech Farm: In contrast, the High-Tech Farm was heavily mechanized, employing automated feeding systems, milking robots, and industrial inputs for high-yielding Holstein Friesian cattle. This approach demanded larger investments in machinery and external inputs, but it allowed for nearly double the milk production at 783,515 kg annually.
Despite these technological disparities, both farms yielded similar total incomes, with the Low-Cost Farm even offering slightly higher income per hour worked (€19.20 vs. €16.36). However, the High-Tech Farm faced much higher machine costs (+31%) and concentrate costs (+97%), as well as a reduced reliance on labor (−47%).
Broader Implications of Technological Change
The differences between these two farming styles illustrate that technological change does not automatically lead to higher incomes or efficiency. In fact, technological advances in the High-Tech Farm resulted in higher operational costs and market dependency without generating higher profits. Instead, the increased productivity merely offset the heightened costs, leaving the farmer with the same overall income but more risk exposure.
This situation becomes especially precarious in the face of market volatility. For example, when milk prices dropped sharply in 2008–2009, the Low-Cost Farm was able to maintain a positive cash flow, albeit with reduced income. Meanwhile, the High-Tech Farm faced potential insolvency, as its higher fixed costs made it vulnerable to price fluctuations. This outcome underscores how high-tech farming models, while offering increased productivity, can be highly sensitive to market instability and external economic shocks.
Moreover, the expansion of high-tech farming systems often leads to the concentration of agricultural wealth in fewer hands. If the entire Dutch dairy sector were composed of High-Tech Farms, employment would be halved, with the total number of farms reduced from 25,000 to 12,500. This would cause significant job losses and the transfer of income from farmers to the industries providing technical inputs, weakening rural economies.
Conclusion: Rethinking Technological Change in Agriculture
The analysis demonstrates that technological change in agriculture is not inherently beneficial. Its impacts depend on how well the technology fits the social, economic, and environmental contexts of farming. While advanced technologies may improve efficiency, they also introduce new dependencies and risks, particularly through increased market reliance and higher input costs.
In contrast, locally adapted, skill-oriented technologies offer more resilience to price volatility and preserve autonomy. The decision to adopt new technologies must therefore be carefully weighed, taking into account not only potential increases in productivity but also the broader social and economic effects on farmers, rural communities, and national economies.
Technological change in agriculture should not be pursued for its own sake but guided by concrete, context-sensitive arguments—such as labor shortages or the need for higher production in response to specific demands. When these conditions are absent, the push toward more industrialized, high-tech farming can harm the agricultural sector and reduce long-term sustainability.
The discussion of how markets and technologies provide spaces for maneuver for farmers highlights the diversity of farming styles based on different combinations of market relations and technology use. The “space for maneuver” concept, as illustrated in Figure 3.8, emphasizes how farmers can position themselves along two axes: one representing market relationships (horizontal), and the other representing technological adoption (vertical). These positions range from more autonomous, peasant-like systems, to highly market-dependent, entrepreneurial agriculture.
- Horizontal Dimension (Market Relations): This axis explores the degree of autonomy or dependency on markets. Some farms can reproduce themselves with minimal external input, while others are heavily dependent on market resources. This also affects transaction and governance costs.
- Vertical Dimension (Technology): This axis examines the types of technology adopted, from skill-oriented, localized systems to mechanical, high-input systems. The degree of deconstruction and recombination of technology also plays a role.
Two prominent farming styles—peasant-like and entrepreneurial—are linked to their respective positions in this space. The high cost and capital-intensive nature of new technology packages often lead to greater market dependence, while peasant-like agriculture remains closer to autonomy but risks impoverishment if external pressures intensify.
Wider Repercussions of Technological Change
The experimental comparison between a Low-Cost Farm and a High-Tech Farm in the Netherlands provides concrete evidence of how these positions affect farm economics and sustainability. Both farms were designed to generate equal incomes with a single farmer working regular hours. However, the High-Tech Farm required twice the production volume of the Low-Cost Farm (800,000 kg vs. 400,000 kg), involving more mechanization and higher costs for inputs like industrial concentrates.
Key Observations:
- Labour and Capital Use: The High-Tech Farm significantly reduced labor costs (−47%) but increased machine costs (+31%) and concentrate use (+97%). Conversely, the Low-Cost Farm relied more on skill-oriented, locally adapted approaches and cheaper inputs.
- Income and Employment: While both farms achieved comparable total incomes, the Low-Cost Farm provided slightly higher income per hour. If all national milk production was based on High-Tech Farms, fewer farms would be needed, cutting employment by half and shifting income from agriculture to industries that supply technology. The overall sector income would fall by 50%.
This illustrates that technological advancement does not inherently result in increased income or production. Instead, it can lead to the concentration of economic benefits outside the agricultural sector, negatively impacting rural economies. Additionally, technological change increases the risk of market dependency, which can be detrimental when market conditions fluctuate—such as in the case of milk price volatility in 2008-2009, where the Low-Cost Farm was better able to weather the downturn compared to the High-Tech Farm.
Market Dependency in Farming
Two methods boxes explore the implications of market dependency in dairy farming (Emilia Romagna, Italy) and potato production (the Andes). These methods examine how dependent farmers are on markets for various resources, such as labor, feed, and land.
- Dairy farming in Emilia Romagna showed moderate market dependency, with a high reliance on feed and machine services but variability across other resources like credit and land.
- Potato farming in the Andes illustrated that while some inputs could be sourced through local, community-based exchanges, others were obtained through market mechanisms, creating degrees of commoditization.
In both cases, increasing market dependency, particularly through mechanisms like credit, tends to restructure the farm labor process and potentially reduces yields, counteracting the yield increases promised by some Green Revolution programs. This pattern is evident in both the Global North and Global South, as market dependency introduces vulnerabilities in farming systems that impact productivity and resilience.
