Practical Solutions for Filipino Farmers and Market Fluctuations

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Problem: Small scale Filipino farmers plant not knowing what the price will be by the time the crop is ready for harvest. When the price drops due to oversupply of vegetables the farmers barely make enough and sometimes even end up dumping their crops because the cost of transportation is greater than the value of the vegetables.

The problem is three-fold. First, it is the inability of farmers to see the whole picture of who is planting what crops, which results in overproduction and then drives market prices down. Second, it is a problem of markets being mostly local, with little to no access to other markets, this keeps prices lower. Third, there is not enough coordination between domestic farmers and government agencies that control the importation of agricultural goods.

Solution: The Department of Agriculture (Philippines) needs to study the market to find out what amount of vegetable production is needed. Once they establish a baseline, then they should come up with a voluntary program that will aid farmers in deciding what crops to plant today based on their projections of future demand.

The Department of Agriculture (Philippines) could issue a quota voucher to farmers, who had enrolled in the program, to plant crops based on the projections and granting them certain protections for if the market price does drop. In other words, if there is a market need for a particular amount of green beans then the agency could issue a proportional number of vouchers. This, assuming import controls, would stabilize the markets and prices. And, if the market price dropped anyways, abiding by the voucher system would entitle the farmer to some compensation.

Another way to get better prices for isolated farmers is to facilitate the connection to a broader market. Access to markets beyond the local region is one way to increase the value of crops produced and also to stabilize price fluctuations. Government contracted transportation and distribution could be a part of this or it could be entirely put out to bids with private contractors. The transportation costs to be offset by the better prices in the destination market, the farmer would get the voucher guarantee price and the rest would go to the transportation contractor.

This sort of analysis and organization could also be done independently of the government. But it would take a significant investment. The national government would be in a better position to facilitate this than a private entity of limited resources. That said, universities could help to develop the models of the agricultural markets necessary to determine how many vouchers should be issued for each kind of crop. It would need to be a collaborative effort. Maybe with the help of transportation cooperatives between these small-scale farmers?

And one key is to incorporate the local ‘grassroots’ input, as well, as a strictly top-down central planning agency would likely fail. Central planning generally doesn’t work and especially not when it removes the autonomy of individuals to act in their own self-interest or allow choice. Participantion would need to be voluntary and incentives market-based rather than artificial. Ideally it would be self-sustaining and entirely funded by the beneficiaries.

Finally, yes, protectionism may be bad in excess, as in North Korea. However, any country that wishes to maintain domestic industry and jobs must moderate foreign imports. Haitian farmers learned this lesson the hard way when cheap, subsidized, rice exports from the United States destroyed their already meager profits and forced more of them to compete for the limited opportunities for employment in the cities. So it is incumbent, on the government of the Philippines, to control agricultural imports for the benefit of domestic producers.

Anyhow, some ideas.

Will the Luddites have the last laugh?

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Technological advancement has always come at the expense of jobs.  

Today one farmer (with machinery and modern practices) is able to do the work that would have taken a hundred people to do a century ago. 

Did this mean ninety-nine people are now out of work?

No.

For every person who lost a job in farming there was opportunity gained to do something else.  Because of technology one farmer can feed 155 people and these 155 are now free to produce other things.

The progress of the past century would never have been possible without the layers upon layers of technological innovations that cost jobs and created opportunities for people to employ themselves elsewhere.

At each step of the way there were Luddites (those who resist labor saving technologies and innovation that might cost them their current job) and thankfully they could not hold back the march of progress or we might all still be subsidence farmers barely able to feed ourselves.

Those who lost employment due to technological advancement found other profitable work.  Not only did we gain the added production of the machines that replaced human labor, we also gained through freeing people (who once did the work the machines took) to do other profitable things.  

The result has been exponential economic growth and an era of prosperity unprecedented in recorded human history.  Automation may temporarily cost jobs, but the long-term result is greater productivity and with that greater wealth overall.  We have tremendous opportunity over our ancestors because of technological advancements.

Despite this, like the meme above, modern Luddites still resist technology trying to protect jobs.  They do not understand how jobs lost to machines leads to new opportunities and greater productivity that benefits them.  

They would rather do like New Jersey did to protect jobs by making self-serving gas stations illegal.  It is quite literally a counterproductive economic policy because it keeps people tied down to jobs that can easily eliminated without much loss.

Innovations like vending machines, ATM’s and Redbox dispensers have added convenience.  No longer do we need to bank during banking hours or wait until Blockbuster opens to rent and return a movie.  

Sure, in each case there was a potential job opportunity lost, but with each lost opportunity is an opportunity gained to do something else and a chance to add more value to the economy than would otherwise be possible.

The result is quite obviously good in overall terms…

This is not to say there hasn’t been pain for some along the way.  Technological advancements (like globalization and trade) benefits the whole economy, but it also can cause suffering for those who are unemployable because they are unable to adapt and take advantage of the created opportunity.

Not every factory worker who had their job replaced with a machine (or outsourced) is intelligent or skilled enough to take advantage of the opportunity to do something else.  Sure, they do benefit from the lower prices, but also might not earn the wages they once did and can come out on the losing end. 

However, most people, and certainly the economy as a whole, benefit from the greater production, the lower cost for goods and the opportunities created.  Few would actually wish to return to a time before the Industrial Revolution and our age of technological advancement.

For every job eliminated there has always been new opportunities created for more skilled labor and professional work.  That is how things have gone until this point and one might assume this is how it would continue ad infinitum.

But do all good things come to an end?

Up until now machines have been useful for eliminating back breaking and repetitive physical tasks.  As a result more people have been freed to do mental or creative work rather than manual labor.

Technology has now advanced to where we might soon reach a tipping point where all human work can be replaced.

According to the analysis of some (please watch this: Humans Need Not Apply) we are nearing a point when even the most skilled professionals and best of creative minds will be outclassed by technology…

What then?

What happens when there is zero opportunity to do something that can’t be done cheaper, more efficiently and better in every way by machines?

What happens when all human labor is worth next to nothing and only capital like land, mineral resources or machines have value?

Our future seems a paradoxical combination of utopia and hell…

On one hand, in this future we will have the capability to produce more than ever with great ease, innovation and efficiency will reach levels humanly unachievable.  This will mean more wealth than ever before and theoretically we could all eventually go on a permanent vacation.

On the other hand, most people (unless they already own land and machines with productive value) will have little to offer in economic terms and no way to advance.  The price of goods would drop, but wages would drop faster and followed to conclusion we would all be unemployed, unemployable and most of us would have nothing at all.

But it would likely never get to that point.  The real tipping point would be when a critical mass of people become unemployed, know they are unable to compete with those (who by good fortune or superior intelligence) who already are established. 

There would be a revolt against the establishment.  Capital of production (machines and land) would almost need to become the property of all people.  Goods and services created would need to be distributed evenly amongst the people.

At this point, once the revolution is over, assuming the machines don’t rise up against us, all we would have left to do is contemplate our existence in a world where all other work is done.  We would spend our time exploring, being entertained by our machines, building relationships and reproducing—there would nothing else left for us to do.

That will not happen overnight.  But, with self-driving vehicles right around the corner, my current occupation (transportation) will be the first in line to go the way of the horse.  So, at very least, I need to think of what my next move will be…

Your thoughts?