Get on a Bus...
How to Alleviate Rural Poverty

The main agenda item of the CGIAR Mid-Term Meeting 1997 in Cairo was the discussion of the Center Medium-Term Research Plans for 1998-2000 in the light of the principal elements of CGIAR priority setting: a people-centered focus, a strong emphasis on poverty alleviation and on the protection of natural resources. An earlier ICARDA case study provides some food for thought on how to tackle rural poverty and on the paradigm of poverty alleviation.

A joint study undertaken by the Turkish Central Research Institute for Field Crops (CRIFC) and ICARDA in the Sivas-Kayseri provinces of eastern Anatolia revealed that in the smallest farm category -- less than 10 hectares -- a full 58 percent of labor (expressed in available days) was not used. This is somewhat unsurprising since the study also found that selling surplus crop production in the market resulted in a net income loss for small farmers of US$ 5 per capita, compared to a total farm cash income of $180 per capita, of which 41 percent came from on-farm production, the rest from off-farm activities. Had the farm not engaged in crop production it would have gained $79 from farm production, mostly from the sale of livestock. Instead, the loss from crop sales reduced per capita income from farm production to $74.

In the Sivas-Kayseri region, wheat and barley are the main field crops, and low wheat prices were considered the main cause of the unprofitability of crop production which was nevertheless maintained to support family consumption. The study team assumed that in this area wheat production was profitable only on large farms.

A situation is which the farmer incurs a loss in the main farming activity may appear absurd but is it really? How many smallholders in developing countries are subsidizing crop production in order to maintain subsistence food security?

The researchers found a number of shortcomings in agronomic practices which can be interpreted both as consequence and cause of the prevailing dire conditions: low yields resulting from inadequate tillage for moisture conservation, ineffective seed-bed preparation, poor seed quality, inappropriate seeding rates and dates of planting, and inadequate fertilizer application.

How about productivity raising investments? The study team found that small farms carry a relatively heavy $64 per capita debt burden, mainly from earlier forays into public credit financed mechanization. In view of the losses in crop production combined with the need to service old credits it is hardly surprising that small farmers are forced to disinvest by forgoing maintenance on capital goods, especially farm buildings. "We found evidence that subsistence farming is subsidized not just by off-farm income, but also by spending fixed assets. How long does this go on before the fixed asset being sold is the land itself?"

The study team found no evidence of remittances from emigrated family members which in other areas of West Asia and North Africa help close the income gap. Also, the Sivas-Kayseri region is characterized by a labor surplus not only among smallholders but also on large farms which, for that reason, have little demand for wage labor.

Off-farm income from tractor hire and sale of handicrafts, especially rugs, apparently did not suffice to sustain the family subsistence production over the long term although it probably absorbed part of the 58 percent of work days not needed in farming. "The only solution would be to get on a bus," the study team felt. A bus to where? Millions of economic and environmental refugees in and from developing countries have already left for the cities or abroad.

What is it that squeezes these smallholders out of subsistence? Is it the world market with its low prices for their main crops? Is it the inability to find more gainful off-farm employment? Is it per capita disinvestment resulting from past population growth which inflated farm families beyond the income generating capacity of their fixed assets? Or is it lack of access to improved farm technology suitable for poor smallholders?

Existing literature on subsistence farming somehow suggests that subsistence equals poverty but that this level of poverty is sustainable because it is isolated from the risks of the market. The CRIFC/ICARDA study shows that in the real world this isolation does not exist because today's subsistence farmers need a cash component of income. Only if this cash income is sufficient to sustain subsistence without de-investment, the prevailing level of poverty can be considered sustainable or, to use an old-fashioned term, chronic. If the cash income is below this threshold, the small farmer's poverty level must be considered unsustainable. Once the family's subsistence is lost, the family with either perish, or migrate and perish, or migrate to join urban poverty, or migrate and get out of poverty.

The concept of poverty alleviation, seen in this light, appears to be a deceptive and euphemistic paradigm. In the case of unsustainable subsistence the foremost objective must be to stabilize the poverty. Technologies, policies and extension packages need to be designed to break the downward spiral, close the income gap and help sustain the fixed farm assets of millions of small farmers, especially women. On a higher plane, this objective may mutate into the need to stabilize the poverty of entire nations, particularly in sub-Saharan Africa, whose economy is based on unsustainable small scale farming.

The CRIFC/ICARDA study pointed to a way out which at first glance might look odd to the economist but makes sense in its context: substitute labor for capital. By posing the question "Is time worth money in Sivas and Kayseri?" the study team indicated the central problem of the rural poor: the close to zero value of their labor's marginal product. To raise labor productivity, the researchers recommend more intensive animal husbandry together with income generating sales of milk, butter, yogurt, meat etc., in combination with a fallow replacement scheme. All this needs to be done with labor instead of capital, they said.

Experience suggests that the farmers probably have already tried most of these ideas but for one reason or another they didn't work. Obviously, what small farmers need is free access to better technologies and/or a different policy environment which makes intensive animal husbandry, fallow replacement etc. remunerative -- changes which can only be brought about by public sector action.

In essence, what the study says is that stabilizing -- and alleviating -- poverty requires substituting labor for capital and raising the labor productivity of the poor without investment in the physical capital stock.

What the case study suggests for CGIAR priorities and programs is that the Group's people-centered poverty focus implies concentrating research efforts on products and policies appropriate to stabilize and alleviate the poverty of the rural poorest, the subsistence and part-subsistence farmers. Research products should be suitable for the small farmer, especially women farm heads, be available free of charge, be easy to access and apply, and be labor based by not presupposing the existence of capital goods nor requiring new investment. From the part-subsistence farmer's perspective it is probably more important to improve the market oriented part of farm activities -- in the case of the Sivas-Kayseri study livestock production -- than the mainly subsistence oriented work -- in this case crop cultivation -- unless a quantum increase in productivity in the latter activity can be achieved.