A guest blogger from Burma

In this blog we host Emelie Svensson who is a MA student at LUMID at Lund University and received a MFS scholarship to do her research in Burma. Here are some of her reflections. 

Burma is often called ‘the land of the golden pagodas’, even though I have not visited any of them; it is certainly true, as there is a golden stupa at every mountaintop and city corner. I often think about the far better use this gold could have done if it was sold and the money used for hospitals, roads and education for the people. Burma has since the coup in 1962 been ruled by an authoritarian military junta, now lead by the ‘civilian’ president U Thein Sein. Both political freedoms and ethnic minorities have been heavily supressed during this long period of ruthless dictatorship, which have been using the so-called ‘dived and rule’ principle instituted by the former suppressors, the British Empire. However, reforms have been visible in the political system in Burma during at least the last six years. The military junta changed their uniforms into suits and began with what they call the ‘Seven-step roadmap to democracy’. Ceasefire agreement and peace negotiations between the national military and armed ethical minority groups have been initiated. These changes have open up the country to both curious tourists, international investments, and it has enabled both press and parts of the democracy movement to return from years in exile.

It might sound like a saga were the bad guys finally realise that their actions have been bad and now are trying to genuinely change the situation. Thus, this is not the case. Burma is still very unstable and the power remains solely within the government and the military, and the changes mostly benefit the government and it’s crony’s. Journalists are continually being imprisoned (and there have recently been cases of extra-judicial execution) for writing about issues that are sensitive to the government. Members of the student movement get imprisoned for protesting and demanding their rights. In addition to this, several fighting between the military and ethnic armed groups are currently on-going both in the north of Shan state, in Kachin state and in Karen state.

So what am I doing in Burma if I am not visiting temples and pagodas (which seem to be the main destination of most tourist that are visiting the country)? Currently I am collecting data for my Master thesis in development studies. I have had the opportunity to do this, as I got a MFS (Minor Field Study) scholarship from the department of human geography at Stockholm University.

In this study I am looking deeper into young women’s participation in the Burmese student and youth movement to understand how these women perceive the current political situation in Burma. This study is especially relevant as Burma is undertaking this democratisation process, or at least this is what the international community seems to believe even if the national opposition, the Burmese civil society together with many scholars are sceptical toward the direction of this process. The civil society, especially the student and youth movement, are important actors in the political landscape in Burma. I will look at the participation and role of women in the civil society using feminist democracy theory, which discuss on the importance of bringing women’s (and other marginalised groups) experiences to the arena to make an inclusive community democratic dialogue.

So how is my study going? I have travelled across the country to meet with youth organisations and the young women working in them. I started in the very south of the country in Dawei and I have travelled to Lashio the north of Shan stat (close to the Chinese border) and tomorrow I am taking a 17 hour bus to the town of Kalay in the north east, close to the Indian border. The women that I have talked to have very interesting both horrifying and more hopeful stories including everything from imprisonment, working underground, having babies, taking important steps toward democracy, war, people fleeing, and loud protest against the new education system. Even though a new night-bus awaits, and my stomach is grumpy as a 5-year old, I am loving this amazing experience and the opportunity to meet so many smart, brave and hard working women in this intriguing and important movement!

  

Canals and furrows now published in Azania

Furrow irrigation

In the summer 2013 I posted a comment on terminology on the Farmlands blog Furrows in Africa -- canals in the Americas ? With some additional comments and references it is now published in Azania;

Abstract _This brief comment argues that the use of the term furrow system for locally developed irrigation in Eastern Africa is misleading in an international comparative perspective. It is at odds with the terminology in irrigation engineering and also with the archaeological terminology used outside Eastern Africa. Internationally, the term canal is used for the artificial watercourses that bring water from the source to the field, while furrow irrigation refers to one specific way of applying water to the individual field.

Find the published version at this link. Do not hesitate to write to mats.widgren@humangeo.su.se if you want a digital offprint.

In response to an earlier blog post

Last week Prof. Martin Jones published a blog post on food plants in Marakwet. He writes about the market in Kolowa in East Pokot "A link between cash crops and men as posited by recent writers such as Caretta and  Börjeson (2014) was not as immediately evident, as the market and other places contained many entrepreneurial women." and then he adds " Caretta and  Börjeson detail a series of crop varietal names which overlap with, but do not entirely match the longer list compiled by Helena.  This is unsurprising as all parties are recalling varietal names, sometimes from their parents’ and grandparents’ generations.  Further enquiries would clarify these, and indeed some terms may have multiple usages." 

In response to Prof. Jones´ statements I would like to add two points. First of all, our article referred mostly to women´s and men´s labor as in cultivation, not in trading. However, it is true that women are the principal, if not the sole, sellers at market, especially at the one in Kolowa and at Tot centre. This circumstance however does not mean that women have control over cash crops or, if you like, more recently introduced crops that have brought about livelihood diversification through sale. Women in fact sell minimal quantities in these local markets, while men deal directly with wholesalers. Yet another instance in which local patriarchal structures are manifested. This power configuration points also to the fact that the informal economy is often feminized and feeds off the care economy i.e. unpaid work. Moreover, as showed by Carney (1993) in The Gambia, markets risk being saturated by women selling vegetable decreasing their returns.  

Secondly, Prof. Jones correctly states that crop names have changed through generations and that the ones mentioned in our articles constitute a partial listing. In fact, while I never heard some of the name mentioned in his blog post, I could remember other ones. Indicative of this multiplicity of names is the fact that once when I was carrying an interview, also with the assistance of Helena Chepto, a lady who was originally from a Chesongoch used a different name than Helena to indicate the same long term millet seeds that we were looking at. Hence, crop varietal names are not only generation specific, but also place specific within Marakwet. As Prof Jones indicates, it is high time to record and archive seeds and crops varieties in Marakwet. This cultural richness risks being lost with the commercialization of seeds which the new Red Cross-sponsored Tot-Kolowa irrigation project could be the dawn of. A forthcoming publication by me and Wilhelm Östberg will discuss this project and the projects in the last 40 years by of Kerio Valley Development Agency more in depth. 

Finally, I welcome Prof. Jones´ blog post because I think it is the perfect examples of how academic communication and debate can be enhanced through new and quicker forums, such as blogs. While articles drafts are not often shared among academicians hence, missing an opportunity to improve a colleague´s work, blogs can be useful straightforward and easy means to make early work visible and open up for comments. 

Bill Gates and innovations in African agriculture

I am not very well informed about Bill Gates activities concerning the development of African agriculture. I am aware of the recent critique from GRAIN, but this is not the reason for this blog post. Before that critique was published Bill Gates tweeted the following (Oct 28th).

"Most poor farmers’ tools haven’t changed in ages. These 4 inventions are making a difference: http://b-gat.es/1wA8DRB   "

He illustrated his tweet with this picture:

I replied in a tweet

Mats Widgren ‏@MatsWidgren  28 okt

@BillGates @erleellis Do not know how Bill Gates counts ages, probably the great grandmother used a different hoe, not industrially made

The reason I answered was that this misconception, that no technological innovations have happened in African agriculture "in ages", is so common. It is not strange that Bill Gates also has this misconception. What worries me is that so many development "experts", philantropic billionaires, not to talk of agro-business directors and land grab promoters are led by this total lack of understanding of the role of innovations in the history of African agriculture and in what small-holders do to today. If you do not know the history of what you want to change, how can you be credible then? How is it possible to argue that African farmers need innovators mainly from outside?

First: the picture shows a woman carrying a steel hoe of the kind that you can buy on markets and in hardware shops all over Africa. It does not represent an implement that has not changed in ages. It is most likely a recent industrially produced hoe.  I own two such hoes - a small one produced in South Africa and a bigger one produced in China, but bought in Tanzania. I later bought hoe handles on a market in Chesoi in Marakwet and was happy to see them fit like IKEA pieces into my two hoes once I brought the handles back to Sweden. The spread of such hoes certainly makes the local innovations less visible. I do not know how long such industrially produced hoes have been on sale in Africa.  But what I know is that there are lots of places where locally developed hoes are still the rule. And I would bet that the great grandmother of the woman on the picture used a locally produced hoe. Such hoes were developed for different kinds of work and were the result of a series of innovations by farmers and local blacksmiths. African agricultural technology does not lack innovations and innovators.

The historical study of agricultural technology in Africa is not very well developed so perhaps Bill Gates can be excused. Even the academic literature on farming in Africa abounds with similar misconceptions. The works on the history African farming implements are few and off the cuff I can only suggest two readings on the tilling implements. This is the first point of departure:

Marzouk, Yasmine, Seignobos, Christian & Sigaut, François (ed.), Outils aratoires en Afrique: innovations, normes et traces, Karthala, Paris, 2000 

Already the cover of that book gives you an idea of the enormous variation of tools. Roger Blench has contributed a geographical broader overview in his chapter African agricultural tools: implications of synchronic ethnography for agrarian history from which an inspiring agenda for further research  is also developed. It is published in the edited volume Archaeology of African plant use (2013). The manuscript is available at Roger Blenchs own website  http://www.homepages.ucl.ac.uk/~tcrndfu/IWAA/Blench.pdf

In Mpumalanga in South Africa the intensive and terraced agriculture c. 1500 to 1850s was accompanied by a special heavy type of hoe with a bored stone as a weight. A replica is here tested in the field.

From the enormous variation of African tools we can draw the conclusion that they were the result of several phases of innovative change all of which must be understood in the context of innovations in farming systems and social factors.  An extreme case is illustrated above. Bokoni farmers in South Africa developed intensive and terraced agriculture long before colonialism. In the same area large bored stones are found and it has been shown that the stones functioned as weights for very large hoes. These probable reflect both the farming systems and the gendered division of labour with men taking a larger share of the tilling than in more extensive forms of agriculture.

If Bill Gates can be excused for not knowing the history of tilling implements in Africa, it is however a well-established and widespread fact that African farmers has shown innovation in other fields -- that of crop development and that of investments in terracing, irrigation and and other forms landesque capital.   The standard "common-sense" view of African agriculture as characterised by inertia and lacking innovative capacity is (as I argue in a recent paper) one of the Four myths in global agrarian history.

Does Agribusiness Contribute to Rural Development?

I will again summarize an article from Zerkalo Nedeli, again written by Elena Borodina, but this time not dealing with small-scale producers, but the largest producers in Ukraine. The article with the title “Unequal Marriage without Government Oversight” was published on August 21 and can be found here (in Russian). The point of the article is to question the degree to which the super large agroholdings will really contribute to national and/or rural development, which is sometimes claimed by advocates of agroholdings (including even the World Bank).

Borodina first gives an account of the polarization of the agrarian sector towards either really small or really large farms, where many people in rural areas are becoming landless while land is being concentrated more and more under agroholdings. At the beginning of 2014, she states, the number of agroholdings approached 140, which controlled 6000 separate farming enterprises (40% of the total), on about 8 million ha of land (40% of the land cultivated by farming enterprises). Of all registered farming operations, these agroholdings harvest about 50% of Ukrainian winter wheat, more than half of the corn and rapeseed, a third of the sunflower seeds, and over 80% of chicken meat. Because land reform has not been completed (among other things, agricultural land sales are as yet not allowed in Ukraine), a “shadow” land market has arisen, which these companies benefit from, and it helps them attract capital.

So these companies do attract capital, which they invest in operations, but, as Borodina points out, there appears to be an inverse relationship between the growth of investment in the agrarian sector and the number of people employed in the agrarian sector. Below I have reproduced a graph using the same data as in her diagram in ZN (note: the original graph measured investment in Ukrainian Hryvnia, but I changed that into dollars using the average annual exchange rate for that year. Export sales and many inputs are often dominated in USD so this makes sense, especially considering the devaluation of the UAH in 2008).    

Borodina also points out that the agroholdings are very good at attracting capital either through IPOs and stock emissions or thanks to their access to inexpensive credit from international financial institutions such as the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) which is part of the World Bank, and export credit agencies of different countries like Austria and Denmark. For example, the Danish Export Credit Agency, from 2003 to 2011, insured the export of livestock products valued at 154 million Euro, from Ukraine. The International Finance Corporation has since 2010 provided financing in support of Ukrainian agribusiness to the tune of 282 million dollars, while the EBRD, over the last 5 years, has presented credits totaling 55 million Euro to some of the largest agroholdings in Ukraine.

The larger point that Borodina seeks to make is that all this support to large-scale agribusiness in Ukraine will not lead to the development of the countryside, but is rather a factor contributing to the ongoing distortion and polarization of the agrarian sector in Ukraine. 

A genuine proposal for formalization of rural household farms in Ukraine or its opposite?

There was a really interesting article recently in Zerkalo Nedeli, a highbrow newspaper in Ukraine, about a proposal to formalize those small-scale household farms in Ukraine that are really operating as commercial farms. There are no numbers on how many households this is. It is certainly not a majority of rural households, but it is an important minority. The article (here in Russian) was written by Elena Borodina and Igor Prokopa, two agricultural economists who frequently write illuminating articles about Ukrainian agriculture for ZN.

This  topic is close to my research, so in this blog post, I will summarize the article. Basically, the proposed law – it is actually proposed changes to the law on fermeri (family farmers) – would allow physical persons who farm relatively small (for Ukraine) plots of land to register as subjects of entrepreneurial activities. In essence this would create a new farm category – Physical Person Entrepreneur (FLP to use the Russian acronym) and the goal is that it would encourage a rather large group of active, commercial farmers who have anywhere from a couple of thousand square meters to 10 ha (or in some cases more) to come out from the informal economy. A common vernacular name for such farmers is odnoosibniki, which means “single person” in Ukrainian and generally refers to a person who cultivates by themselves the 4 to 5 ha of land they received in the privatization of the local collective farm. Many odnoosibniki also cultivate the land of relatives who received land allotments during the privatization reforms. Even people who did not receive any land in collective farm privatization or people who lease out their land to another farm, can still have access to up to 2 ha somewhere, often close to the home, that they can cultivate very intensively.

The incentive for such people to register as subjects of entrepreneurial activity is that they would be able to participate in state support programs intended for family farmers and also there is a promise of a special social insurance program. The costs however – as Borodina and Prokopa detail – appears to be very high, perhaps too high. The proposed changes to the law envisage a rather cumbersome registration process, requiring that these farmers, many of whom would not have a car, travel 10 to 40 km to the local district center. It would further entail paying pension fund taxes, registration with the tax authorities, and the obligation to regularly answer statistical surveys from district statistical departments.

Borodina and Prokopa estimate that a household with 2 ha and 3 cows, which would have an estimated annual income of 30,000 UAH (about 1826 Euro in today’s crashing exchange rates), would go from paying 40-50 UAH in land tax today to somewhere between 300 and 900 UAH in annual tax, plus around 400 UAH a month in social taxes, plus still VAT. Then there is the amount of time one would have to spend. Private households wishing to register as FLP would have to travel, not just once, but regularly to the district center to pay taxes and submit reports on their activities.

At the same time as this possibility is now being proposed, there is another proposed law change that would forbid households from selling surplus produce on markets in an attempt to push every household that is to some extent commercial to be in the formal economy.

Borodina and Prokopa argue that it is important to try to formalize the activities of the active rural households engaged in commercial agriculture, but that these proposals will do the opposite – push active farming households deeper into the shadows.

Instead they argue that farms in the informal sphere should be formalized as family farmers without having to register as a legal person (or a FLP). One should recognize, they argue, that farming is a special activity and should not face the same demands placed on other economic actors. Second, the registration procedures and accounting obligations for family farmers should be greatly simplified and the tax obligation lightened. Finally, reforming family farming should only take place within the context of a comprehensive reformation of agrarian policy with respect to all categories of farms, a reformation that would define and accept family farming as an essential element in ensuring the functioning of the agro-food sector.   

This was a good article and I recommend those who can read Russian to read Borodina’s and Prokopa’s other material on ZN.  

Interim Results from current agricultural season of the Swedish Agroholdings in Russia and Ukraine

Originally, I wanted to blog about how the current crisis in Ukraine is affecting or not affecting the "Swedish" investments in Ukrainian and Russian agriculture -- such as Black Earth Farming, etc... However their recently posted half year results (see below) do not give an indication of much of anything, and that points to a completely different problematique, i.e. the special problems agricultural firms face in reporting results, which itself can be said to be part of a larger problem concerning the degree to which corporations can optimally conduct farming compared to family (or peasant) owned and operated farms.

The diagram below shows the relationship between net profit/loss as published in the half year results of  four "Swedish" firms between 2006 and 2013 and the final annual result for net profit (Note that data for the entire period 2006 to 2013 was not available for all the firms, for example for Grain Alliance (GA), there was only data for 2013). The x-axis is net half year profit/loss in kr, and the y-axis is net annual profit/loss. BEF posts their results in dollars, while Trigon posts their results in Euro, so I have used the average annual exchange rate from dollar or euro to Swedish kronor, which are published by the Swedish Central Bank. Arrayed on the x-axis in blue are the half-year net profit/loss results for 2014 in kr (annual results for the year have not yet of course been published). Note that Agrokultura has posted an interim net profit of 47.7 million kr, for 2014, which however becomes a net loss of 48 million kr when taking into account the sharp decline in value of the Ukrainian Hryvnia. I have chosen to use the latter figure in this diagram. In any case, as shown in the diagram there is only a loose correlation between half year net profit/loss results and annual profit/loss results (r2 = 0.0305).   

Generally speaking, interim results are a good indicator for annual results, at least according to an article published in 1972 by Reilly, Morgensen and West in the Journal of Accounting. OK, that's a rather old article, but this is just a blog. (It would be interesting to see how agricultural firms compare to non-agricultural firms in terms of the relationship between interim and annual results, and how vertically integrated food processors compare with “pure play” companies such as the Swedish agricultural companies in the former Soviet Union) Obviously firms in sectors that experience a lot of seasonality will see more fluctuation in interim results in relation to annual results, and agriculture is definitely a sector with a lot of seasonality. The problem here however is not the seasonality per se, but the way in which international accounting principles stipulate that crops growing in the field should be valued for the purposes of financial reporting.  IAS 41 Agriculture, which are the international accounting principles that all the Swedish listed firms use, state that, after enough “biological transformation,” the crops should be valued according to “fair value,” less cost of sales, and, importantly, that the fair value of the crops should appear in the income statement as revenue. That is how we can talk about these firms being profitable before they have sold any of the harvest. The problem is that fair value depends on yield and prices, both of which are constantly moving targets. The basis for “fair value” for the first half of the year is generally taken to be the yield estimate and prices on 30 June, but even this close to the harvest of winter wheat, when one should have a good idea of what the harvest will be and what price it will fetch, small adjustments in either can have a big impact on the bottom line. A second factor affecting quarterly results is how slow or fast companies sell their harvest. Generally the largest part of the harvest is sold in Q4 of the year of that harvest, the second largest part of the harvest is sold already in Q3 of the same year and then the third largest part is sold in Q1 of the next year. But depending on storage capacity and what they think future prices will be, companies can keep crops in storage hoping that the prices will be better in the future or they can sell them relatively fast, believing that prices will only go down in the future. The first scenario will make a farming company’s bottom line look worse for the calendar year in which the harvest was gathered, but better during the next calendar year. At times, companies can still be selling crops into the second quarter of the following year. Finally, it has to be mentioned that late summer crops (corn, sunflower, soy) have an increasingly large impact on the annual result -- something that would not be visible in the 1H / 2Q reports because not enough biological transformation has happened to make a fair value assessment. 

To go back out to the big picture, firms listed on the stock exchange are obligated to publish interim and annual results (though auditing requirements are stricter for annual results). For agricultural firms, this in turn requires that the firms account for the value of crops growing in the field. Internationally accepted accounting principles state that crops growing in the field should first be valued at cost, but then, after enough biological transformation has occurred, they should be valued at fair value, and posted in the income statement as revenue, despite it being unrealized. This can be and often is the  largest item on the revenue side in interim results. (For more on IAS 41 Agriculture and how fair value is arrived at, see Fischer and Marsh 2013) The firms have not come up with this by themselves, and if anything, we – coauthors and I – have heard a fair amount of criticism about the fair value exercise coming from representatives of these firms in ongoing research we are conducting. Black Earth Farming's 2Q 2014 results are interesting in this regard. In what can only be described as a good faith effort to really arrive at a fair value, they explain in some detail how they are changing their fair value accounting. One of the main points to make about this is this is not something that a family farmer would have to go through. 

Is there another way to tell half way through the year, if it will be a good year? The answer is not really -- because it is too early to  make an assessment of the late summer crops. One can say at this point that, however, just as the spring was favorable in terms of weather in Ukraine and Russia, the fall is shaping up to be hot and dry, so the yield of summer crops will be negatively affected, even as prices, at least according to this article, continue to fall. 

Third quarter results are a better indicator of the final annual result, since as assessment of the summer crop outcome is possible. The diagram below is the same as above, but for 9 month results as reported in the 3Q reports. Note that Agrokultura does not publish 3Q reports, and Trigon did not publish 3Q figures in 2007, so there are a few missing data points. Even here though there is a lot of variation where 9M net result is -60 million kr or more (i.e. from -60 million kr towards 0): at this level of net loss 9 months into the calendar year, annual results have varied from -150 million kr to +50 million kr. So, there are some question marks here as well (and not enough data points).

So we'll have to wait until November, when companies post 3Q results, before we can get a somewhat better sense of how 2014 will be for these companies. This year, probably the biggest impact will be how currency exchange rates affect the bottom line. If I read Agrokultura’s 2Q report correctly, they would have been profitable if the Ukrainian Hryvnia had not lost 50% of value. For the next crop year however, these firms will face tighter credit and more expensive input prices (since many inputs are imported).