Monday, May 31, 2010

Diversified African Agriculture

This article tells the story of a mysterious pest that is degrading Africa's supply of Cassava. I did not know that this root is a major caloric source for hundreds of millions of people there. For some more facts read this .

The interesting economics here is farmer choice. At the end of the article, the Times quotes a "smart farmer" who recognizing this shock has now diversified his plantings to now also grow some beans. The article makes the interesting point that Cassava has been a safe crop to grow because it requires so little work that a farmer sick with malaria can still grow this stuff.

The article got me thinking about how farmers can be nudged to be more "nimble" in the face of unexpected shocks. Climate change will require that farmers become nimble in the face of climate shocks and this pest shock is an interesting case study. If this pest eats up a fair bit of Cassava, what are the general equilibrium implications? What will consumers substitute to if Cassava becomes scarce? Can these nations import agricultural products from nations not suffering from these pest shocks or do domestic tariffs and quotas (that protect domestic farmers) bind and poor households will really suffer?

For subsistence farmers, it would interest me how diversified a portfolio of agricultural crops do they grow? Do they have all of "their eggs in 1 basket"?

The NY Times article celebrates the Bill Gates Foundation and its investments in this region. But, what can Big Bill's $ achieve here? What is the targeted intervention in this case? What is limiting African farmer diversification? Is it a lumpy piece of machinery such as a tractor? Or is it information and knowledge about how to grow other crops? Or is it access to water for growing other stuff?

If the Gates Foundation provides such basic infrastructure, will the incumbent farmers gain from such investments or will they be outbid for the land by others and displaced to more marginal land as the new infrastructure's value is capitalized into land prices?