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Does the environment cause poverty?

SESKwaleAfrican countries are blessed with ample cropland and resources, but suffer from crippling and unforgivable levels of poverty, have some of the shortest lifespans on the planet and the highest rates of infant mortality in the world. Meanwhile, Japan, Korea, Sweden, Switzerland and Singapore are wholly the opposite, yet mostly lacking in everything that Africa has. Clearly, the picture is more complicated than merely having access to a natural resources.

However, within countries, the picture might be different. African countries are complex and diverse places. Poverty is often confined to the most unproductive regions, areas with poor soils, poor rainfalls or dangerous terrains.

I was just working with some socio-economic data from one of our field sites, and noticed some interesting patterns (note the map up top). In Kwale, a small area along the Coast, socio-economic levels vary widely, but neighbors tend to be like neighbors and patterns of socio-economic clustering emerge.

Note that the poorest of the poor are concentrated to an area in the middle, which I know to be extremely dry, difficult to get to, difficult to farm and generally tough to live in.

I tried to see if socio-economic status (as measured through a composite material wealth index a la Filmer and Pritchett but using multiple correspondence analysis rather than PCA) was related to any environmental variables that I might have data for.

I fit a generalized additive model using the continuous measure of of wealth from the MCA as an outcome. Knowing that very few things in nature or human societies are linear, I also applied smoothing to the predictors to relax these assumptions. The results can be seen in the plot at the bottom.

A few interesting things came out. While it is hard to tell much about the poorest of the poor, we can tell something about the most wealthy. The richest in this poor area, tend to live in areas with the richest vegetation (possibly representing water), a high altitude (low temperature), high relief (no standing water) and in locations distant from a wildlife reserve (far from annoying and dangerous wildlife).

I’m not sure the wildlife reserve is meaningful (unless the reserve was an area undesirable for human habitation to begin with), but the others might be and represent a trend seen in other Sub-Saharan contexts. Areas without malarious swamps and ample farm land tend to do the best. Central Province, one of the most developed areas of Kenya, would be an example.

But the question has to be, does a harsh environment doom people to poverty, or do people self shuffle into and compete for access to more favorable areas? Is environmentally determined poverty (or wealth) an accident of birth, or the result of competitive selection?

Alright, back to work. Oh wait, this is my work. Well….

Results of GAM model of SES in Kwale. Y axis is the continuous measure of socio-economic status.

Results of GAM model of SES in Kwale. Y axis is the continuous measure of socio-economic status.

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New insurance product protects pastoralists from losses due to drought in Kenya

This is rather interesting. Pastoralism is characterized as a complex system of avoiding, accounting for and taking advantage of risk, not unlike hedge fund managers in the United States. Animals represent potential earnings, prices at markets vary with grazing conditions and perceived long term benefits, and decisions to sell animals are not made lightly.

In the past, pastoralists have protected against devastating losses through herd maximization and cooperation and conflict over prime grazing spots, along with systems of redistribution where animals from wealthy herders are given away or stolen with the approval of the community. The world has become complicated, though, as droughts become more and more frequent, political borders and conflicts constrain the movements of pastoralists, and as the spear has been replaced with the AK-47.

An interesting though appropriate insurance system might help to mitigate losses and stabilize communities.

Brucellosis creates political uproar over Yellowstone bison herd

Bison population by year. Bars represent culls.

Bison population by year. Bars represent culls. From Dobson, et al. (1996)

Well, at least that’s my take. Most people would probably point to humans when talking about political problems. Here, though, I’m going to blame the bacteria.

Bison were once found across most of the middle and western United States and Canada, but were nearly hunted to extinction in the 19th century. Expansionists sought to cut off Native American food supplies and the Industrial revolution created an intense demand for buffalo hides, which were used for belts to run large machinery.

Fortunately, a few conservationists saved the fewer than 25 animals who remained in the wild in Yellowstone Park. In 1902, captive bison were introduced into the park to increase the genetic viability of the herd. Populations were managed and regulated until 1966 after which the herd was allowed to expand naturally.

However, climate change and food scarcity has caused some of the expanding population to move out of the park in search of grazing lands.

This is a real problem for cattle herders. Bison are thought to be the largest reservoir of Brucellosis in the United States, despite decades of effort to eliminate the disease. When bison roll into cattle ranches, bacteria can spread from bison to cattle.

Bison appear to suffer little from the disease, but in cattle, spontaneous abortions are likely, resulting in major economic losses to livestock producers. When cattle test positive for the disease, they are culled immediately. The US government compensates the farmer for the loss.

Bison who leave the park and wander into neighboring Montana threaten the state’s Brucella free status. If Montana were to lose that status, all cattle exported from Montana would have to be tested and certified Brucella free, which would increase costs to livestock producers.

Park managers have considered culling the herd, and reducing its size to a more manageable 3000 animals. They propose killing several hundred of the animals which are in the vicinity of Montana’s border as both a precaution and a way to scale back the bison population. The carcasses will be sold as meat.

And this is where environmentalists come it. Several organizations have sprung up around the issue. Most notably, a man chained himself to a 55 gallon drum filled with concrete to prevent more bison from being killed and shipped off the slaughter. Hoping to avoid an escalating political confrontation, the authorities called off the cull.

Opponents of the cull claim that Yellowstone can support more than 6000 bison, far over the target population size of 3000. Proponents argue that the park may theoretically support more than 3000, but a larger herd means that it is more likely that bison will wander into Montana in search of food. The risk there, of course, is that Brucella will be brought into Montana. It is conceivable (to me) that this whole row wouldn’t exist without Brucellosis.

I’m especially interested in the issue because it parallels similar problems in Laikipia, Kenya. Livestock producers and conservationists are constantly in conflict over issues of land rights, economic impacts of disease threats, the rights of wildlife and strategies to protect it in increasingly crowded and rapidly changing areas of the world.

Given the very different perspectives of conservationists and ranchers, no solution has been found in Kenya yet. I’m doubting that one will be found in Yellowstone. Environmentalists are taking this as a moral issue (save the bison!), conservationists are approaching this as a practical issue (manage the herds properly and stay out of the political debate) and herders speak to economic issues (Brucella threatens my business).

Financial woes fuel Brucella outbreak in Northern Cyprus

Brucellosis hotspot?

Brucellosis hotspot?

Cyprus made the news a while ago because of its crushing debt crisis requiring a 10 billion Euro bailout.

Less known is that Cyprus is actually two countries, one of which is Northern Cyprus, which is only recognized by Turkey. It’s safe to say, though, that Northern Cyprus’ financial health is deeply connected to that of Cyprus’.

Northern Cyprus apparently doesn’t have enough money in it’s budget to adequately monitor, test and deal with an rapidly spreading outbreak of Brucellosis among its livestock because of the Cypriot financial collapse.

Brucella is a nasty bacterial disease which I’ve written on before which includes outcomes such as fever, malaise, miscarriage, chronic arthritis and heart disease, depression, mania and death. It can infect all mammals and is highly transmissible; any contact with a bacterium will result in infection. Though only one case of human to human transmission has ever been recorded (sexual transmission), Brucella is well known as a public health threat to people who work with livestock.

Brucella is ranked among the most economically important zoonotic diseases globally, and presents threats to humans, animals and wildlife.

The chairman of the union of livestock producers, Mustafa Naimoglulari, confirmed that the brucellosis microbe has been discovered at 60 farms and criticized the authorities for not launching a fight against the disease.

He said that blood should have been taken from the animals for analysis in order to establish which of them are contaminated.

In statements to Kibris, the official responsible for agriculture in TRNC, Onder Sennaroglu said that they have taken money from UNOPS to deal with the issue, but they could not eliminate brucellosis.

He noted that he knows that money should not be an excuse, but the cost of this issue is very high. “I have to say that resources are needed, and we have no resources at the moment,” he admitted, adding that they have applied to the EU for money.

The Cypriot financial crisis has its roots in the US subprime mortgage crisis. In fact, the pattern of the precentage of debt to GDP of Cyprus follows that of the Eurozone, but rapidly increases after 2012, where the EU flattened out. Cyprus previously relied heavily on a tourism fueled real estate bubble in addition to revenues from tourism itself. As debt went bad in the US and the Eurozone, debt went bad in Cyprus. Having no other sectors to depend on, the Cypriot economy collapsed.

Now, we are seeing that the financial collapse and the loss of government revenues to support public health efforts and having deleterious effects on animal and, likely, human health.

Egyptian instability is crushing Kenya’s economy

Coffee prices since 2000

Coffee prices since 2000

One of the problems with African economies, is that they tend to rely on receiving export revenues from just a few items. Some economies, like Nigeria and Angola, rely on oil. Oil economies are expecially problematic as the extraction process creates very few jobs, and revenues tend to flow directly into the pockets of corrupt politicians and middle men.

Kenya, lacking mineral or oil resources, is an agricultural economy. Specifically, they are really good at growing tea, and, to a lesser extent, coffee. This helps explain why Kenya’s developmental trajectory has been far more successful than that of other economies. Tea production is labor intensive and often depends on small and mid-sized farms which employ lots of people. Instead of money flowing in the pockets of the corrupt, who often squirrel it away in overseas accounts, money goes directly in the pockets of growers.

Kenya is the UK’s biggest tea supplier, but Egypt buys more tea by volume from Kenya than any other country. A piece in Think Africa Press today wrote on the dual problem of falling demand for tea from Egypt due to prolonged unrest, and that of falling commodity prices worldwide.

The cause of the farmers’ problems lies far to the north of the cool, tea-covered slopes of the Aberdares, in the heat of Cairo and the continuing fallout from the Arab Spring. In 2010, the last year before the uprising in Egypt, Kenya supplied the tea-obsessed UK with around half of its tea, but Egypt was the the single largest destination for Kenyan tea exports, buying nearly a fifth of what the factories around Nyeri produce. With the overthrow of President Mohammed Morsi in July 2013 and the ongoing campaign against the Muslim Brotherhood causing continued political instability, demand has plummeted and prices have gone with them.

“It’s a supply and demand issue,” says Chai Kiarie, Field Services Manager at Gitugi Tea Factory. “We produced more tea this year, but we still made nearly $2 million less than we did last year. With these problems abroad, the demand just isn’t there.”

This isn’t an isolated problem. Coffee prices, once riding high on a boom in commodity prices have been steadily falling since the financial collapse. The commodity boom was a winning sitaution for African economies and helped drive much of the rapid growth seen throughout the 00’s. Regulation has started curbing speculative practices that drove the increases, removing a source of destructive volatility which drove up food prices in developing countries, but has also decreased badly needed foreign exchange revenues.

I visited a few farms the last time I was in Kenya. Farmers aren’t waiting around for subsidies to help pull them out of a potential mess. All of the farmers I spoke with are looking for new ways to diversify their operations and meet potentially lucrative world wide demand for competitive products. All of them wanted to think of ways to increase productivity while decreasing the cost of inputs. The pressures from falling tea demand could help push them to find ways to innovate and increase both revenues and stability.

Cell phone banking in Kenya protects public health

MPESAIt’s rare that I read an academic paper I can get really, really excited about, but this is one of them.

Researchers at Georgetown and MIT have shown that transactions over M-PESA, an African phone banking service can help struggling households when faced with a sudden illness, weather event or economic shock.

We explore the impact of reduced transaction costs on risk sharing by estimating the effects of a mobile money innovation on consumption. In our panel sample, adoption of the innovation increased from 43 to 70 percent. We find that, while shocks reduce consumption by 7 percent for nonusers, the consumption of user households is unaffected. The mechanisms underlying these consumption effects are increases in remittances received and the diversity of senders. We report robustness checks supporting these results and use the four-fold expansion of the mobile money agent network as a source of exogenous variation in access to the innovation.

M-PESA is a cel phone based banking system which allows users to send and receive money to friends and family. Transactions can be small; most users are transferring less than $10 at a time. Users are charge about $.40 to transfer money and a percentage to withdraw. It is free to deposit money into the system.

Anyone can be an M-PESA agent. Starting an M-PESA business requires only a small investment so that even extremely rural areas have access to the system. Agents receive a percentage of transaction costs, and often piggy back it onto existing enterprises such as grocery stores and mobile phone shops. M-PESA not only provides a needed service, but has also created profitable business opportunities for people even in isolated rural areas.

The system is wildly popular. Africans are extremely mobile but maintain deep friend and family networks often spread out over wide distances. When a person has trouble, he or she will often turn to family and friends for financial help.

Previously, people would send money by getting on a bus and travelling, or by sending it with friends who might be going to a particular destination. Transportation costs are high ($5 to go a distance of 200km) and often outweigh the amount to be sent. Sending money by hand also incurred risks of loss to theft and misuse.

The number of M-PESA users has skyrocketed since its introduction in 2007. Nearly all adults in Kenya have access to a cel phone now, and the number of M-PESA users is now 70% of all mobile phone users.

Shocks due to illness or negative weather events such as drought can be devastating for a poor household. A single bout of malaria could set a family back as much as a month’s income or more. When poor households lose money, they don’t get it back and successive events can quickly pile up so much so that families will often wait until illness has become too severe to effectively treat.

Jack and Suri, the researchers who conducted the study found that illness shocks can reduce a households consumption by at least 7%. An average household only consumes around $900 a year, nearly half of which is for food. A 7% reduction in consumption could mean that households will simply eat less given a sudden negative event.

M-PESA users, however, experience no reduction in consumption given a sudden health or economic event. Presumably, the ability to transfer money quickly over long distances provides insurance against disaster. Mutual reciprocation allows the system to effectively function to protect against financial disaster.

This has incredible implications for public health. Financial concerns are an incredible barrier to insuring prompt and effective treatment for diseases such as malaria, diarrheal disease and respiratory infections. An efficient system of moving money creates a broader social insurance scheme, protecting the public against the worst and, hopefully, reducing costly advanced treatments and mortality.

M-PESA is a private sector entity, which was never intended as a public health intervention. However, in an area where public sector health delivery is inefficient, underfunded and most broken, a private sector banking initiative could help bolster availability of life saving drugs (for example) by insuring a consistent flow of money. Shops in extremely isolated rural areas will be more likely to stock malaria drugs if they know that customers have the means to pay for them.

This also has incredible implications for development. One of the pillars of the Millennium Development Goals and the recent Rio+20 Conference on Sustainable Development is to insure that the basic health needs of the poorest people on the planet are met. This cannot happen without addressing the greater problem of financial stability of poor households, which requires the participation of the private sector. Covering basic issues of financial movement, security and access to funds by isolated households is a major step to not only helping households which are disproportionately impacted by health and weather events, but also allows flow of cash to poor regions, bolstering local economies.

Elsevier Journal Retracts Bogus Study on GMOs to the Benefit of Humanity

Last week, Food and Chemical Toxicology, an Elsevier publication, retracted a paper testing the hypothesis that genetically modified corn causes cancerous tumors in rats. The paper was often used by GMO opponents as “proof” that genetically modified crops are detrimental to human health.

The journal’s statement:

Unequivocally, the Editor-in-Chief found no evidence of fraud or intentional misrepresentation of the data. However, there is a legitimate cause for concern regarding both the number of animals in each study group and the particular strain selected. The low number of animals had been identified as a cause for concern during the initial review process, but the peer review decision ultimately weighed that the work still had merit despite this limitation. A more in-depth look at the raw data revealed that no definitive conclusions can be reached with this small sample size regarding the role of either NK603 or glyphosate in regards to overall mortality or tumor incidence. Given the known high incidence of tumors in the Sprague-Dawley rat, normal variability cannot be excluded as the cause of the higher mortality and incidence observed in the treated groups.

No doubt, this retraction will do little to calm GM opponents, whose paranoiac vitriol prevents the application of reason to issues of biotechnology development. GM foes recently vandalized an experimental farm in the Philippines, for the crime of growing rice enhanced with beta carotene, a precurser to Vitamin A. “Golden rice” is seen as a possibility to mitigate vitamin A deficiencies in developing countries. GM opponents live in constant fear of capitalism, but failed to note that the trials were being performed in a publicly funded facility.

Just as I have no opinion on any other agricultural product, I have no opinion on GM foods. Given their variety and my lack of expertise on agricultural issues, I will restrain comment on the risks or benefits of GM products compared to other ag technologies. However, I do take issue with using shoddy, misinterpreted and fabricated science to support political claims. The anti-GMO panic, which is based in an age old populist fear of development, will only have the effect of dampening research into new agricultural technologies.

Given increasing constraints on land, water and rapid demand to actually feed people, everything has to be on the table to find new ways of feeding people adequately and efficiently. Anti-GMO alarmists have already successfully strangled the potential for development by knocking out the EU, Japan and Kenya, an important leader for African agriculture. (Read about the Kenya GM ban, and prepare to be perplexed)

It is, of course, ironic that anti-GM folks, who are so intent on using science to support (correct) claims of climate change risks, would so willingly toss it aside for this issue.

That Elsevier has retracted this paper will have little effect. GMO opponents will continue to use it anyway rather than looking harder for more intelligent and constructive ways of supporting their positions (and there are economic arguments to be made).

Do I sound angry?

(Updated 7:20 pm, Dec 9, 2013: I originally wrote that Elsevier had retracted the article. This was incorrect, the journal retracted it. I also changed the text stating that I have no opinion on GMO’s. This is true. Lacking expertise on agricultural matters, I cannot comment on the risks and benefits of GMO’s over other products. I have, however, read extensively on issues of human health and GMO’s. I am at least somewhat qualified to comment on that aspect.)

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