Bread-and-butter issues still matter to the bottom line

Feeding the World
November 24, 2006

Economic histories before 1800 are dominated by agriculture because it was by far the most important sector of all economies; its subsequent history in most countries is one of relative decline as the industrial and then the service sectors became dominant and the share of agriculture in gross domestic product fell dramatically.

This decline does not mean that agriculture failed: in Feeding the World , Giovanni Federico considers agricultural development over the past 200 years an outstanding success story. Agriculture has fed a world population that has grown sixfold, with a greater variety of products, at falling prices, while releasing labour to the rest of the economy.

Agriculture has thus been crucial to modern economic growth, and this book seeks to explain how these achievements came about. This is an ambitious undertaking that, on the whole, succeeds admirably.

Federico approaches the problem through the theoretical perspective of development economics allied to an intensive quarrying of data. His synthesis of the secondary literature is impressive, with a 56-page bibliography of well over 1,000 references. The book reviews trends in world output, prices and trade from 1800; changes in the magnitude of agricultural inputs (land, capital and labour); productivity change (the statistical appendix attempts to include all available estimates of total factor productivity in agriculture across the globe); and technical progress. Trends in production and productivity are related to institutional change and to the increasing role of the state. Finally, Federico considers the relationship between agriculture and economic growth in the long run. His systematic approach makes the book straightforward to read: its arguments are clearly elaborated and summarised in a conclusion that starts with 15 "stylised facts" about agricultural development in the past two centuries.

Until the 1930s, agriculture on a world scale experienced extensive growth, that is a growth in inputs, especially of land. Since then, the continued growth in output has been a result of growth in total factor productivity, in other words, output per unit of input has increased. In fact, in "advanced" economies, agriculture led the way, and productivity growth in agriculture has been greater than in other sectors, including manufacturing.

This growth has been a consequence of technical progress and increases in efficiency brought about by the better allocation of resources. Technical progress took the form of biological innovations (plants and animals), cultivation practices, chemical products and machinery, with Europe and Japan leading in land-saving technology and the US in labour saving.

But much of this technical progress was possible only though institutional changes, often promoted by the state, including the establishment of property rights, changes in farm size, the development of contracts and the establishment of factor markets, including mechanisms for providing credit.

Federico takes the view that institutions are best considered endogenous, as they proved flexible enough to adapt to technical change and to change in the land-to-labour ratio. State intervention began in the 19th century, with various forms of protectionism imposing import duties, and intensified after the Great Depression of the interwar years. After the Second World War, Japan, Europe and the US increased the level of state support through subsidy and protection with the intention of raising prices above "world"

levels, while in less-developed countries state intervention was mostly harmful to agriculture. Federico's verdict is that state intervention has, on the whole, reduced aggregate welfare of the whole population, especially in socialist economies.

Not all will agree with the author's philosophy that "imperfect data are better than no data"; and although Federico is careful to evaluate the reliability of the data he collects, the patchy nature of available material is a problem. Many of the historical statistics presented exclude Africa and China, for example. Thus, the authority of some of the findings may be illusory. Collecting truly comparable data on a world scale is very difficult. Although price data stretch back to the Middle Ages, output data are available for Western countries only from the late 19th century and for the Third World from 1945, when the United Nation's Food and Agriculture Organisation began to collect statistics across the world.

While the conventional agenda of agricultural economics provides for a logically rigorous structure, it does have its omissions. The impact of monumental agricultural changes on the environment is not really considered. For example, although food is a renewable resource, it is now produced by using nonrenewable resources. In the 18th and 19th centuries, British agriculture was revolutionised by new agro-systems that replenished soil nitrogen organically - by integrating livestock and crop production, by introducing new fodder crops and by increasing the proportion of leguminous crops. This was a remarkable achievement in that output and productivity were increased without the addition of nonrenewable inputs into agriculture. This did not last, and subsequent agricultural developments have depended on inputs produced by the chemical industry burning nonrenewable fossil fuels. Including environmental degradation in the balance sheet makes the success of agriculture over the past 200 years rather less "outstanding".

Agricultural historians and development economists will find that the book addresses many, though perhaps not all, of the key issues in their discipline. For example: are small farms more efficient than large ones? what are the sources of technical progress? how do different forms of contract affect efficiency? and how did institutional change affect agricultural performance?

Feeding the World will be of great interest to economists, development specialists and policymakers, and all economic historians should read it. Methodologically, it is an excellent example of a quantitative economic history, grounded in theory but sensitive to empirical realities worldwide. Substantively, it provides an essential context for understanding economic development over the past 200 years on a global scale.

Mark Overton is professor of economic and social history, Exeter University.

Feeding the World: An Economic History of Agriculture, 1800-2000

Author - Giovanni Federico
Publisher - Princeton University Press
Pages - 416
Price - £29.95
ISBN - 0 691 12051 X

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