Saving labor

 David Dawe   |  
Photo: Peter Fredenburg

(Photo: Peter Fredenburg)</span

Living standards can rise only as workers become steadily more productive. For rice farming, improving productivity means adopting such labor-saving innovations as broadcast seeding and mechanization, especially in the absence of breakthroughs that lead to higher rice yields.

Some would prefer to keep rice farming labor-intensive to preserve rural jobs, no matter how dead-end. The problem is that stagnant farm labor productivity props up the retail price of rice and so undermines an essential foundation of living standard improvement: household food  security, or the ability of families to afford enough food to support a healthy, active life for all.

Most of the food-insecure in South and Southeast Asia are landless rural laborers, farmers who grow crops other than rice, and urban slum-dwellers — in other words, poor people who buy their daily rice, not grow it on their own land. Thus, an important component of household food security is lower retail rice prices. These are sustainable only when the cost of production per ton drops.

By far the main costs in rice farming are land and labor, so the key to lower production cost is using less land or labor or both. Higher yield with little additional input is one way to lower production cost because it reduces the land needed to grow a ton of grain.

The other option is to reduce the labor input, which occupies by far the largest share of non-land production cost across Asia. As labor’s share of production cost exceeds that of other inputs, such as fertilizer and pesticide, the potential savings are commensurately great.

Among seven of Asia’s major rice bowls, Thailand’s Central Plain is the only one where labor cost is less than half of total non-land production cost (albeit still the most important item). Not coincidentally, the Central Plain has the lowest production cost — not from high yields but from reductions in labor input achieved during the past 20 years. Broadcast seeding has replaced transplanting, and harvesting and threshing have been mechanized with combines.

In China, transplanting is disappearing in many areas, and despite small parcel sizes, combines are being rapidly adopted, as they are in Punjab and Malaysia. While mechanization is not cost-effective now in areas with the lowest farm wages, reducing labor input is a major challenge facing Asian countries that wish to become more competitive in rice production. To be sure, saving labor in rice cultivation has a price because many poor laborers receive a substantial portion of their income from available work in rice fields, and lower rice prices may force wages down. In the short run, laborers will have difficulty finding new jobs. However, because these laborers are rice consumers, they will also benefit from the lower market prices brought about by reduced production cost. Furthermore, most of these laborers have diversified sources of income off rice farms.

Research is limited on how much agricultural wages adjust to changes in rice prices, but the best-known studies on this question (both done in Bangladesh) suggest that lower rice prices help more than lower wages hurt or that lower rice prices do not lead to lower wages, presumably because demand is substantial for labor outside of the rice sector.

Growth in the industrial and service sectors is nevertheless critical to ensuring that agricultural laborers can find new — and perhaps better— jobs to replace those lost in rice cultivation. This is something that both Thailand and China have successfully achieved.

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David Dawe is an economist. 

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