The problem of guaranteeing food supplies in Bolivia

Ansis integral de la estructura y funcionamiento del sistema agroalimentario en Bolivia (Integral study of the structure and functioning of Bolivia's food and agricultural system), by Jorge Dandler H., Joslanes J., Julio Prudencio B., Jorge A. Munoz, La Paz, Ediciones Ceres, 1987, 185 pp.

"Bolivia is a country with abundant natural and human resources which form a productive base capable of providing sufficient food for the whole population."

This is the starting point for a wide and exhaustive study carried out by a group of researchers from the La Paz-based Centre for Studies on Economic and Social Realities (CERES) on the structure and functioning of Bolivia's food-producing sector.

The claim is a daring one, especially in the light of the widely held idea of Bolivia as a country battling with the serious problems of malnutrition and insufficient foodstuffs, affecting a large part of the population.

The authors of the report are certain, however, that "the main problems of Bolivia's food-producing system do not stem entirely from low production, but can be blamed on the lack of suitable storage and selling facilities to ensure sufficient basic foodstuffs of a quality and at prices which correspond to the demands of the people."

The shortfalls in production of such vital foodstuffs as wheat, milk, and edible oils can be rectified either by stimulating domestic production or by encouraging the population to use traditional Andean cereal crops, the nutritional value of which is the same or even higher. This is considered preferable to stepping up imports and accepting gifts from other nations and international organizations.

The authors' claim that Bolivia is intrinsically capable of producing wheat and, therefore, of solving the problem of guaranteeing foodstuffs is based on an analysis of Bolivia's food-producing sector in this book (chapters 1-4) and in an earlier series of studies carried out for the CERES institute under the direction of Julio Prudencio.

The most important of these are "Produccigropecuaria y abastecimiento en Bolivia" (Agricultural production and food supply in Bolivia) by Julio Prudencio, 1981; "La situacilimentaria en Bolivia" (Bolivia's food situation) by the same author, 1984; and "Crisis de abastecimiento y estrategias de resistencia en Bolivia - El caso de La Paz" (Crisis in supply and strategies for action in Bolivia: the case of La Paz) by Monica Velasco L.

The year that the Nationalist Revolution began, 1952, is taken as the point of reference in all these works since it is considered to be the most important point in the development of modern-day Bolivia's food production system. It was then that the Government first faced the issue of self-sufficiency and began to leak for a solution.

The new democratic administration had three main aims. First, it wanted to put an end to the existing policy of importing huge quantities of foodstuffs, and to boost domestic agricultural production on the Altiplano, along the valleys of the southwest, and in the eastern "new frontier" area of the Santa Cruz and Beni regions. Second, it wanted to set up new large-scale farming ventures involving livestock, cotton, soya, and sugar-cane production. And third, it wanted to encourage development of the food industry.

These aims were sound, and, according to the authors, should not have been impossible to achieve. But not one was realized and today Bolivia's food situation is no better than it was 35 years ago and may even be worse.

Imports of foodstuffs such as wheat, milk, vegetable oil, and rice fell for a short period during the first years of the revolution, only to rise to their former levels, then skyrocket in the 1960s and '70s, and especially during the military regimes.

Similarly, new large-scale stock raising and intensive farming projects got off the ground in the east with some degree of success. However, much of the produce soon began to be exported, bath legally and illegally, and did not help to swell the domestic market as it should have done. The food industry never managed to shake itself free of its dependence on other countries for machinery and raw materials.

Peasants' role misunderstood. Moreover, the CERES researchers say, the Government made the serious mistake of not understanding the important, indeed essential, role which Bolivia's peasant community has always played in producing and trading in key foodstuffs for the rural and urban population.

The authors of the CERES report agree with United States researchers Wennergren and Whitaker, who maintain that the peasant sector not only feeds itself, it also provides a large percentage of the produce needed to feed the urban population and assert that the Bolivian peasant sector may be considered the first and most important link in the country's food-producing chain.

The failure to fulfil the aims established by post-revolutionary governments during the 1950s and '60s, and the lack of attention paid to the important role of the peasant sector, rendered the Bolivian food-production system highly vulnerable to foreign penetration, especially by such major exporters as the USA, the European nations, and Argentina.

Prudencio and his colleagues make a close study of import policy and the willingness of successive Bolivian governments to accept food aid from other nations and international organizations, as well as the consequences of this on the eating habits of the population and on Bolivia's food-producing system itself.

The Bolivian peasant farmer ends up by concentrating on the production of one or two more saleable goods in order to afford imported foodstuffs such as flour, vegetable oils, sugar, and biscuits. He is then obliged to do without foods with high protein and vitamin levels, such as eggs, meat, chicken, and Andean cereals, in order to buy less nutritious foods, such as flour and, even worse, biscuits.

As time passes, changing eating habits are resulting in an alarming increase in that large part of the population which suffers from insufficient food (under-feeding) and malnutrition.

Having analyzed the various and mainly unsuccessful measures adopted by governments to stimulate increased output in the national food-producing system (price controls, agricultural credits, subsidies, currency controls, tariff restrictions, investment in farming, creation of institutes to ensure a supply of basic food needs), the authors sketch an ambitious project for an alternative food-producing system, in which the peasant sector plays the fundamental role which it has performed with almost complete success throughout the history of the country.

Pino Cimo

Understanding the labour market in Kenya

Paul Collier and Deepak Lal, Labour and Poverty in Kenya 1900-1980, Clarendon Press, Oxford, 1986, 296 pp., £27.50.

This book is part of a series of case studies on labour markets in developing countries. It supplies an enormous amount of historical and economic information on the labour market in Kenya, and at the same time applies a methodology to labour market analysis in developing countries with the aim of testing the neoclassical approach.

The first three chapters are on the historical development of the labour market in Kenya, which the authors divide into three different periods: coercion (1800-1948), compassion (1948- 1968), and competition (1968-1980).

During the coercion period Kenyan society was stratified along racial lines. The whites monopolized the export of agricultural commodities and the most important posts in the administration: the Asians were employed in the internal commerce and secondary roles in administration; and the Africans served as the unskilled labour both urban and rural.

The compassion period was characterized by the recognition of trade unions and the introduction of minimum wage laws and a protective labour code. In other words, the labour market was brought under institutional control, and a deliberate wage policy to modify income distribution was implemented.

The most recent period, competition, occurred during a period of rapid but uneven economic growth. Institutional control over the labour market was not abandoned, but the formal apparatus of regulation "gradually became a validation of market forces rather than a constraint upon them".

The historical background outlined, it is argued, not only allows a comparison to be made between different periods (i.e., comparative statistics), but also accounts for the dynamic forces relating one period to another. As followers of Sir John Hicks in methodology, the authors declare that their interest in economic history is confined to its implications for economic analysis.

The model presented starts from two assumptions about the "vital" processes for the development of Kenya. According to the authors, development is, first, connected to the efficient growth of smallholder agriculture, linked to investment and innovation rates. Second, it is connected to the efficient skill formation of the urban labour force. However, these two processes have been "attenuated" because of the wage policy implemented during the compassionate period. Wage policy has increased the urban-rural differentials, creating two main effects. While it has somewhat distorted urban wage structures, especially by reducing seniority premiums, it has also increased rural-urban migration.

While other studies on the Kenya labour market stress that this migration process involved an increase of urban poverty and unemployment, the authors underline that its main effect was to provide rural smallholders with the financial means to undertake the development process. Urban workers, thanks to the income shares they obtained because of the wage policy applied, were able to provide the resources for financing rural innovation, in the majority of cases on a family linkage basis. The flows of financial resources from urban workers to rural smallholders allowed innovation and investment in agriculture to take place.

In the latest period, the competitive rural-urban wage differentials were reduced. The returns from education fell, increasing the overall number of unskilled employees. However, the reduction in urban-rural wage differentials had a beneficial effect on skill formation at the firm level. While in the previous period the inter-urban wage differentials between senior and junior workers narrowed, reducing the incentive to acquire firm-specific skills, the reduction in wages for the urban unskilled workers again led to a seniority and skill differential, and therefore meant an incentive to acquire skills. Urban wage differentials, according to the authors, have proven to be a fundamental element in developing human capital.

The conclusions and policy implications of this analysis are direct. The authors believe in the functioning of the labour market as an equilibrating force. Wages are not considered rigid despite the imbalances in the demand and supply of different types of labour. The authors criticize alternative approaches: "The policy implications of the segmented labour market type view are grossly misleading. In this view these wage differentials do not serve any useful efficiency function, although they do determine the distribution of income. Hence, it is implied, public policy can and should squeeze these differentials, so that the resulting income distribution is made to conform to public preferences.... This conclusion would be as unwarranted as its premise. At least in Kenya, its post-war economic history provides an ample demonstration of the costs which are associated with the various wage policies aimed in part at affecting the income distribution."

Intervention in labour markets proved to be counterproductive. After their very detailed analysis, which includes recognition of the role of institutions (the authors argue that "trade unions serve an efficiency function, and to that extent would have to be invented if they did not already exist"), the policies they recommend do not differ from an ancient and well-known laissez-faire.

A last remark on the fact that the authors - who declare themselves to be new neo-classical economists - refer to the views of their opponents as "conventional wisdom". In present-day economics, it seems that "conventional wisdom" has become synonymous with "other school traditions" - whatever they are.

Daniele Archibugi