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RURAL DEVELOPMENT AND THE HERTITAGE OF CHAYANOV AND GEORGESCU-ROEGEN: ON LABOUR INTENSIVE AND PEASANTS Ernst-August Nuppenau1

INTRODUCTION This paper deals with question whether there is one generic pathway of agricultural development or whether there are alternate options that can be pursued. It is the aim of the paper to contrast the current deliberations and suggestions of development paths for transition countries, which are primarily given by the copying of the Western European agricultural development after World War II, with alternatives. Contrasting scenarios are large mechanized and conglomerates with reduced employment, high-tech mechanization, use, energy intensive farming, etc. on the one side and small-scale farming with a partly preserved labour force and low external input use on the other side. On the agenda of sustainable development, labour intensive farming, small farms, diverse landscapes, nutrient etc. are alternatives. They are alternatives in rural development, when it comes to , which is nowadays frequently demanded. But these alternatives seem to be not very appealing because of low income, and difficulties in attaining them in practice. But the chances of replicating the proved experiences of West are also meager as the pathways are unknown and risky. In scenarios, particular concepts like eco-agriculture (MC.NEELY, SCHERR, 2003) are gaining importance. Issues such as saving , multi- functionality and energy efficiency of agriculture are emerging, but for income ma- ximizing such talks are far beyond their current aspirations. They want mechanized farms, high income and reduce labour. A modernization of agricultural sectors is on the agenda. EU integration in terms of copying the West is the consequence (POPP, POTORI, 2006). In transition countries this idea is widespread and there seems to be no alternative. Aren’t there? However, we still have a problem with the apparent economic relevance, need and anticipation of reduced employment in agriculture (BAUMS et al. 2007). Out- migration, unemployment and low competitiveness of agricultural sectors are seemingly the accompaniment of a continuing reduction of the agricultural labour force in Western and Eastern Europe. Against this background we have to remind us that the substitution of labour for energy is a projection. Can we criticize the

1 Ernst-August Nuppenau, Dep. of and Market Research, J.-Liebig- , Giessen, Germany

403 projection for further reduction of the agricultural labour force on the grounds of energy is becoming scarcer? The critique has to be seen in the light of increasing energy prices and emerging accusations that agriculture is now a net emitter of greenhouse gases as a consequence of using too much fossil energy. A net emitter position is opposite to the belief that agriculture is a green, value-adding operation. Notably many questions are related to the productivity of land, energy, and labour. In this respect the discussion of energy productivity of different types of agriculture is open (CLAY, 2004, p. 14ff.). The next question is, what the alternatives are and how can we retrieve alternatives from the history of peasant behaviour towards managing energy resources, energy and needs, and what is the relevance of them in the development pathways? The answer is difficult since the Western European model has proved its potential to raise living standards under conditions of cheap energy and strong non- agricultural growth. But do we have similar preconditions in transition countries? Can it really be replicated and sustained in the next thirty years or more? The new challenges ahead have to be investigated considering the fact that it may be too late to start a western path under new conditions of scarcity and dominance. Note, Western Europe was a first comer and there are reasons to believe that a pure catching up will not prevail. Copying the West is not sufficient in promoting and establishing a viable rural development, rather a quick adjustment to the new scarcity may be better. For an alternative we have to think about and factor scarcity on the one side, as conditions for modernization, and objec- tives and institutions on the other side, as boundaries.

AGENDA It is the aim of the paper to remind researchers on the current significance of the older ideas of Chayanov and Georgescu-Roegen in the light of energy crisis, energy use, ecological economics and . Especially questions of labour intensive agriculture, farm structure, appropriate technologies, small- scale rural support , and infrastructure are of relevance. Questions are: (1) Are technologies readily available that suit the rural development needs in Central and Eastern Europe given scarcity of energy, but not labour? (2) Are they less conflicting with the environment, and (3) can we preserve an eventual affinity for a more labour intensive farming? This discussion has also to be seen in the context of EU policies to promote sustainability and role of new member countries. Does it really make sense to add huge energy consuming agricultural enterprises to those existing in the West? But also will (can) it be accepted that a larger labour force will at lower payments in the new member countries if these “peasants” are disconnected to land ?

404 However, the focus has to be on the role of labour and energy, self-employment, objective functions, value addition/creation, and perhaps compensation for eco- system services. For instance, looking at the issue of renewable energy and its use in farming, a question is do self-employed farmers calculate their value added differently than large commercial farms? Using a modelling approach one can show that commercial large-scale farming calculates energy use differently (MARTINEZ-ALIER, 1997). For self-employed farmers his labour is differently counted than external labour and energy input. Especially CHAYANOV’s (1923) theory sheds some light on the issue of energy and labour use in agriculture. The intuition is that commercial farms have a tendency to use more external energy than small sized farms. The paper must refer to theoretical arguments why and how we can see a difference between peasant and industrial farming (MAYUMI, 1994). The question is who produces more and how policy can cope with the externalities? The paper again refers to deliberation of MAYUMI (2001) who stressed the recycling of traditional peasant farming instead of input-output thinking of . The issue is, can rural development be characterized as sustainable, if nutrient cycles are interrupted as in modern farming, or not? Then the even more interesting question is, how does a special farm and rural structure, which is either composed of small-scale or of large-scale units (under modern conditions: labour intensive smallholders or fully mechanized farming), impact on the potential to become an increased suppler of renewable energy. One has to think about the issue of energy surplus under different conditions of prevalent farm structures. This question is important since it can be assumed that our societies will put pressure on the food sector to become a larger net-surplus supplier of renewable energy instead of consuming too much fossil energy for , heating stables, etc. From the author’s point of view, since many things are unclear within the perspective of farms and rural and landscape development, it is worthwhile to think about scenarios that follow an internal logic of structure and behaviour.

OBJECTIVES, FARMING SYSTEMS AND LABOUR IN AGRICULTURE The work of CHAYANOV (1923) is very much related to objectives of peasants and of manual labour. He distinguishes between gross and net revenue. Gross revenue is the surplus of a farmer for labouring. If we deduct expenses to sustain a living we receive the net revenue. Expenses are not only in monetary terms, but also in physical. On p. 27 Chayanov makes a remark that farmers work harder in energy terms if they produce on poor . He further states that in peasant economies there is a labour surplus (p.27) and marginal labour values (prices) are low. Additionally we have low (external energy) avail- ability and hence high capital prices. This favours a labour intensive production.

405 Following his further statement that management units decide along the minimum availability principle of factors (p.42) we can conclude that manual labour rather than purchased energy is essential for value creation by peasants. This hypothesis is supported by other studies (BRANDT, 1988). In contrast the economics of large farms is usually more capital intensive. Capital intensive farming, or as frequently noticed highly mechanized agriculture, has dominated the strategy of modernization. As MARTINEZ-ALIER (1997, p. 227f.) put it: “There was a consensus forty years ago on the superiority of large-scale mechanized farming Inside each farming system, there are decreasing returns to the labour input, Smallholders adapt ecologically that a capitalist economy would be unable.” He further indicates “In wage employment, work of very low marginal productivity value will not be employed” (p.228), but in peasant eco- nomies (to emphasize). From the arguments one could draw a conclusion which is actually presented by Martinez-Alier quoting (NETTING, 1993): that: “Therefore, some would argue ‘that peasants would be needed as fossil-fuels-saver, because they run on solar energy’” (p. 229.). Apparently, such deliberations depend on a sound analysis of food production, through-put, and energy use. This analysis was imitated after the first oil crisis (PIMENTAL, 1973); but forgotten after 25 years. However, the main argument is that agricultural structures determine the ecological orientation and hence future considerations of the sustainability of the farm sector rely on an assertion of a farming system, though things are nor fully clear. A further note is needed on the classification of ecological impacts of agriculture. Ecological impacts have not only to be seen in the array of energy use and CO2 emission, methane, etc. Farm structures are crucial for landscape appearances and the bio-diversity of cultural landscapes, i.e. resilience. There is much talk that traditional landscapes offer a much higher biodiversity than landscapes that are farmed by modernized large-scale operation. The problem is that structural changes and anticipated developments such as labour productivity increase measures are mostly bought by a decline of diversity and complexity of the farming practices. In contrast a peasant economy is not that much productivity oriented as compared to modern development concepts. As a traditional way in farming peasants have been cautious of investments and risk taking. Being aware of their limited capacity to cope with disasters, especially in fragile areas, peasants are rather averse to innova- tions which are difficult to assess. Risk aversion and nature reliance, combined with a tendency to minimize efforts in case of venture capital, have prevented some areas from transformation.

406 IMPLICATIONS Adaptation The issue is now, why worry about high energy agriculture, especially for development concepts and for the future of agriculture in transition countries? First of all, there may be not the same chance to enjoy low energy prices and have a similar economic and ecological environment that enabled capital and energy intensive farming. Note that the West will also come under stress and it may seek or find a new more labour intensive farming, itself. However, transition agriculture will start from a different level. The already reached comparatively large mechanized farms (in the West), eventually, will be unobtainable for countries like Poland, the Baltic countries, Bulgaria and Romania. The Czech, Slovak, East German and partly Hungarian situation is different because there are still many large farms, inherited from the Communist period which survived. In the transition countries which have chosen a path way of small-scale farming, it will of interest to notice how productive as well as energy and labour efficient the newly established farms are and how they can become more energy efficient after the adaptation to the new environment in which they operate. For example, it can be hypothesized that we need appropriate technologies for a more labour intensive far- ming, not yet developed in many incidences. Inherited technologies from the com- munist period like and harvesters can not be scaled down to small farms. Eventually it would be worthwhile to look, for instance, to China where two wheel, minimal motorized, low diesel consuming engines offer a better factor combination than present day alternatives in Europe. Neither four hundred horsepower tractors (purchasable from large industrial companies) nor hand hoe technologies (used and produced locally as garden tools) may be the solution in food production. The theory of induced (HAYAMI, RUTTAN, 1985) offers a conceptual framework to study adjustments under changing scarcity of inputs.

Income A major counterargument to the pathway of labour intensive farming is the argument. Since labour intensity is combined with low marginal productivity or returns to labour, being an indicator of wages, it could be stated that labour intensive farming automatically means poverty and poverty trapped, rural development (MARTINEZ-ALIER, 1997). In fact we can not state that any anticipated labour intensive farming, which can be currently envisaged, will offer the same high earnings, for instance, of an industrial worker currently working for a car factory in Western Europe. Hence, in pure monetary terms there will be an ongoing impetus for migration. Apparently, if things can be projected as they are, c. p. with respect to the same economic fundamentals in economics, rural areas will

407 loose labour. However, the question at hand is, is this the only criteria and how do we assess the wealth of a population? It is not the place over here to speculate about the future of industrialization and consumerism (MAYUMI, 2001) in a world that has to stick to ecological laws and to guarantee its survival. But, how that will impact on the opportunity costs for farm labour is important. It may be sufficient to think how to combine labour intensive farming with other labour intensive operations, which already fit into the rural setting and are exceptional in income generation. Exceptional labour intensive agrarian systems eventually allow a survival of a traditional farming system even if labour prices increase. First of all one can think to discover potentials that offer ecologically sound farm practices and where the competition from industrial produces is lower, for instance hemp and flax as niches. Again these are not new suggestion but they have to be adapted in the transition countries. One can further learn from Spain and Italy who have partly, under conditions of an inherited labour intensive farming, converted regional farming in a well recognized non-industrial but still sufficiently income offering system (DOMINGUEZ, et. al. 2006 and DI IASCOVO, 2003). Of special interest in such case are the combination of ecologically favourable practices, that include eco-system services of a diverse agriculture, and the opportunities of special products, that offers income (for example, see the Dehesa or Spanish silvopastoral system of holm oak, ham and regional specialty: MC.NELLY, SCHERR, 2003, p. 79; or the aspect of regional specialties and agro- in Italy: DI IASCOVO, 2003). In this cases labour prices (wages and rents) are relatively independent from competing since demand and supply elasticity are low and, additionally, one can enjoy the relatively high income elasticity. The examples maybe exceptions and they surely do not offer a survival for all rural dwellers. But the interesting feature is, if one studies the cases in more detail, that in many cases eco-system services are involved creating wealth and that they attribute to farmers as rents as well as augment returns from labour. Eco- system services are a productive resource and their income generation is eventually a source that helps farmers to survive. Notably it depends on the scarcity and ownership of the . It may happen that no longer a substitution of eco-system services (natural control) by industrial produces () prevails. This will provide a good income source for farmers entitled with eco-system services. The problem is that eco-system services are frequently collectively owned and so returns are to be shared. It would be better for rural development if private rights are introduced and some people become richer. So development with eco- agriculture and -services has some distributional aspects. At least, when it comes to the question how to derive higher incomes in rural areas, rents from functioning eco-systems and their services are aspects that should not be neglected.

408 Development Policy The emerging next question is, do we need a specially designed rural development policy that promotes eco-agriculture and impedes energy intensive agriculture. This is apparently a normative question. However, if it is accepted that for a certain period of transition a government intervention is needed to direct or to promote eco-agriculture, more practical questions are, what are instruments, governments can use, and how can we set objectives, that can realistically be met. Note, objectives have to be met within a given framework of financial and legal prerequisites. Moreover, the current situation after past developments with respect to energy intensification has to be anticipated. Assuming that most agricultural sec- tors in transition countries are far behind energy intensity as compared to most “advanced” West European countries like the , Denmark and the United Kingdom, it eventually may make sense to learn from those countries that have been less “progressive”. In this respect the German case and attempts to redirect rural development in Germany may be of interest (KNICKEL, 2006). Knickel states: “The structure of farm holding has been partially responsible for German agriculture experiencing lower levels of intensification, scale enlargement and specialization than many EU countries” and “For many family farms the mo- dernization model offers limited prospects for securing income and continuity, and these farms have tended to explore `alternative´ development options” (p. 87). Options are “direct marketing, landscape and biodiversity management, the enhancement of ecological cycles through, for example, and , the production of renewable energy and the provision of new services in rural areas” (p. 88). Notify that this strategy of diversification, which is deliberately chosen by small-scale or still partly peasant farmers, is a strategy that is on the one side driven by the need to find new value adding opportunities for labour surplus and on the other hand driven by a policy that is NGO and partly government sponsored (KNICKEL, 2006, p. 90). Especially the last German government (1999 to 2005), put some emphasis on supporting actively small-scale and . However, the idea was not to subsidize a specific farming () rather to initiate a complete change towards eco-farming. For instance a “green tax” seemed to be an additional step to a new addressing of the role of energy in agriculture and rural development (KNICKEL, 2006, p.91). There was also a talk about an ecologically oriented tax reform (NIENHAUS, KNICKEL, 2004) and we have to appreciate that “nature and landscape management is an activity that is clearly driven by policy factors” (KNICKEL, 2006, p. 92). It must be stressed that still some government commitment exists towards nature management, though it is difficult to judge on the financial sustainability. Support will be most likely given to peasant farms rather than large-scale farms because of public opinions that small farms better suit the prerequisites of environment and food quality. On the issue of support and finance it must be mentioned that

409 schemes exist that combine private and public such as amenities and tourism. It depends frequently on private-public and non- governmental that, for instance, farmers market regional products, offer tourism and seek to charge fees for collectively organized services. Though there is scope to invent new schemes and mechanisms they still need to be tested (NUPPENAU, 2006).

CONCLUSION This contribution states arguments for favourable peasant behaviour towards low energy intensive agriculture and nature preservation. It informs what are alternative rural development pathways which rely on small-scale and peasant farming systems rather than large- scale commercial farming. Literature is quoted that sup- ports the arguments for labour intensive farming. Though this pathway might, in the short run, result in lower income, energy scarcity in the long run, will dictate it. In the medium run, anticipated higher energy prices, will eventually create situa- tions that are more conducible for a labour intensive, small-scale farming. In bet- ween, as examples show, there is scope for farms to survive under conditions of creativity. Ventures like, labour intensive processing, agro-tourism, support for multi-functionality, etc. can offer additional income helping rural areas in transition countries to maintain characteristics of an agricultural sector which is not converted into industrial farming.

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