SEA Working Paper 97/02
Social
and Economic Challenges to the
Development of Complex Farming Systems
David J. Pannell
Agricultural and Resource Economics, The University of Western Australia, Nedlands 6907
Abstract
The fundamental challenge in developing a new farming system is to have it adopted and maintained by farmers. The difficulty of achieving widespread adoption is increased if the new farming system is complex and/or radically different to current farming practice. This paper is a review of these issues with a focus on farming systems based on mimicry of natural ecosystems. It is proposed that there are four conditions which are necessary for an individual farmer to adopt a farming-system innovation: awareness of the innovation, perception that it is feasible to trial the innovation, perception that the innovation is worth trialing, and perception that the innovation promotes the farmer’s objectives. Challenges involved in meeting each of these conditions are discussed. It is concluded that the most important challenges in developed countries are: (a) developing a system that is in fact more profitable than current practice; (b) assessing whether a system is in fact more profitable than current practice; and (c) overcoming the problem of deep uncertainty about the technology. In developing countries one must add the additional challenges of (d) high interest rates/high discount rates; and (e) insecure or inequitable land tenure.
Introduction
The point of departure for most of the papers at this workshop is that "a radical change is necessary if we are to develop a sustainable agriculture", (Jackson, 1984 p. xiii). The particular radical change being considered here is the development of farming systems which mimic natural ecosystems (e.g. Jackson and Bender 1984). Pursuit of this goal will certainly challenge our scientific/agronomic capacities, but it should also be recognised that the social and economic challenges to development of any new farming system are formidable. The aim of this paper is to review these social and economic challenges. A recurring issue will be the complexity of the systems being considered. They are complex not only in their biology, but also in their management, in their economic impacts and in the social attitudes and perceptions which they generate.
The fundamental challenge is to develop a farming system that will be adopted and maintained by farmers. Very rarely are farming systems transformed. The available examples where it has occurred are for extreme cases - extreme opportunities to exploit or extreme problems to overcome. In practice, in a democracy it is not in society’s power to directly select a sustainable integrated farming system, because it is not possible to simply order farmers to adopt the chosen system. Rather we are constrained by the effectiveness of the various tools that can be used to encourage adoption. The farming system that comes into existence will be that which results from farmers’ reactions to the government policies and institutions in place (Hollick, 1990; Pannell 1997).
There is a wealth of empirical evidence on the factors that influence farmers’ adoption of innovations (e.g. Feder and Umali 1993; Feder et al. 1985; Lindner 1987), and it includes some very clear-cut messages. Unfortunately, responding to these messages is often not straightforward. We can identify the conditions necessary to achieve adoption of an agricultural innovation but it remains difficult to meet the conditions.
The next section is an outline of the conditions for adoption of an agricultural innovation. Thereafter these conditions are reviewed in more detail and the specific challenges for complex farming systems are identified. An example is presented which illustrates many of the points arising in the review. In the conclusion, those challenges which are likely to be most difficult to meet are suggested.
The Conditions for Adoption of an Agricultural Innovation
It is important to recognise that a farming system based on mimicry of natural ecosystems would be a new innovation from the point of view of farmers. They are likely to come to it with scepticism, uncertainty, ignorance, prejudices and preconceptions and with an existing farming system that may or may not be operating as they would wish, but is at least operating. Unless they are new to farming, they will have trialed other innovations in the past and concluded that at least some of them fell far short of the claims made for them. They will be particularly wary of a system that is radically different from that with which they are familiar and comfortable. They will almost certainly hold an attitude that the scientists advocating such a radical system do not understand the realities of farming, or at least of their farm.
In getting past this initial set of attitudes and beliefs, there are several specific hurdles which must be overcome. The following sub-sections describe the states of farmer awareness or knowledge which must be achieved.
Awareness of the innovation
In this context, "awareness" means not just awareness that an innovation exists, but awareness that it is potentially of practical relevance to the farmer. Reaching this point of awareness is a trigger which prompts the farmer to open his or her ears - to begin noting and collecting information about the innovation in order to inform their decision about whether or not to go to the next step of trialing the innovation.
Perception that it is feasible to trial the innovation
There is strong evidence that, the world over, most farmers are "risk-averse" (Antle 1987; Bardsley and Harris 1987; Binswanger 1980; Bond and Wonder 1980; Myers 1987; Pluske and Fraser 1996). This is evident from the observation that they will not leap into large-scale adoption of a new innovation. Rather, they generally employ small-scale trials, adjusting the scale either upwards towards full adoption or downwards towards disadoption as they gain knowledge and confidence in their perceptions about its performance.
This trial phase is very important, perhaps the most important phase in determining final adoption or disadoption. If small-scale trials are not possible or not enlightening for some reason, the chances of widespread adoption are greatly diminished. This is because farmers will be very unlikely to leap to full-scale adoption due to the real risk that the innovation will prove a full-scale failure. This risk of failure should be viewed as part of the cost of gaining high quality information about the innovation. Clearly, the larger the scale of the trial that is necessary, the larger is the cost of this information, and the less likely the farmer is to make the investment in trialling.
Perception that the innovation is worth trialing
Conducting a trial incurs costs of time, energy, finance and land that could be used productively for other purposes. To be willing to trial an innovation, the farmer’s perceptions of it must be sufficiently positive to believe that there is a reasonable chance of adopting the innovation in the long run. It is not necessary for the innovation to be thought to be better than current practice, because the farmer realises that the results of a trial may revise his or her perceptions upwards. However, it cannot be too much worse or the chance of recovering the cost of the trial through later productivity improvements will be too low.
Perception that the innovation promotes the farmer’s objectives
Lindner (1987) in a wide-ranging review of the adoption and diffusion literature concluded that the objectives of individual farmers figure centrally in the adoption and diffusion process. He found that,
"there is compelling empirical support for this emerging consensus that the final decision to adopt or reject is consistent with the producer’s self interest." (p. 148)
"Self interest" in this context is considerably broader than merely "profit". It may, for example, include objectives related to risk, leisure and environmental protection. Nevertheless, profit is a particularly important element of "self-interest". Indeed, the available evidence indicates that although the speed of uptake of innovations is influenced by a range of factors (including social and demographic factors), the final level of uptake seems to depend primarily on economic factors (e.g. Marsh et al. 1995). There is also strong evidence that even for innovations oriented towards resource conservation, economic considerations are the most important determinants of actual adoption decisions (Cary and Wilkinson 1997; Sinden and King 1990). Much has been made of the need to promote an ethic of stewardship among farmers, but based on statistical analysis of actual farmer behaviour Sinden and King (1990) concluded that,
"While the stewardship motivation and personal factors encourage perception and recognition of a problem, economic factors promote actual adoption." (p. 179)
Similarly, Cary and Wilkinson (1997) found that,
"Generally, the best way to increase the use of conservation practices to overcome land degradation … will be to ensure the practices are economically profitable." (p. 20)
The finding that self-interest (broadly defined) drives adoption decisions has strong implications for sustainability-related issues in agriculture. It is likely that some farmers will respond somewhat to perceived social pressures or community expectations, but in aggregate this tendency will be swamped by the pursuit of self-interest. If the existing technologies being promoted are not sufficiently profitable (or more generally beneficial), we must either develop new technologies, or make the existing technologies more attractive through such means as subsidies, tax concessions or, in the extreme, taxes or legal penalties for non-adoption.
The use of the terms "awareness" and "perceptions" in the headings above highlights that these are social and economic issues. Of course they are influenced very much by biological and physical factors, as well as other socioeconomic factors, in ways which are discussed in the following sections outlining the specific challenges to meeting the conditions for adoption.
The Challenges in Raising Awareness
There is little empirical evidence about the rate at which farmers become aware of new innovations but what evidence there is would be of serious concern to anyone wishing for rapid adoption. Gibbs and Lindner (1986) in a survey-based study found that the time taken for farmers in South Australia to become aware of the existence of new innovations varied markedly. For many farmers it amounted to years despite the presence of extension activities designed specifically to raise awareness.
Marsh et al. (1995) found that there was very wide variation among farmers in the time taken to commence trialing a new crop, lupins, in Western Australia, and this is at least partly due to long lags until awareness of the crop by some farmers. Lupins are a legume crop which have subsequently proved to be highly profitable in appropriate niches of the Western Australian farming system, but following the first release of high-yielding varieties in 1979 it took eight years for the number of farmers growing any lupins at all to peak (Figure 1). In some shires, the number of farmers growing lupins was still increasing in 1992. If it takes so long for a clearly productive and profitable innovation to diffuse fully, we might expect diffusion of less profitable innovations to occur on a time scale of decades rather than years.
The Challenges in Making a Trial Feasible/Worthwhile
One element of "trialability" is the size of trial that is necessary. As noted earlier, the larger this is, the less likely the farmer is to make the investment in trialing. There may be particular cause for concern about systems based on ecosystem mimicry from this point of view. Such a system clearly would require a minimum scale to be effective.
The farmer must have the resources to be able to conduct a trial. For example, in a recent survey of Western Australian farmers we found that there was a positive relationship between a farmer having extra labour on the farm and the probability that they are conducting trials of new grain legumes. Without access to relatively high levels of labour, the cost of the time the farmer must give up to sow the trial is too high, primarily because sowing the trial coincides with sowing of the main, money-earning crop. As a second example, upland farmers in some parts of the Philippines have been encouraged to build rock walls along contours to reduce soil erosion. However this is extremely labour intensive, and most farmers cannot spare the time from other farming duties.
Figure 1. Adoption of lupins by farmers in different shires of Western Australia
Another requirement for a trial to be worthwhile is for the results of the trial to be observable; there is no value in the trial otherwise. In terms of direct, saleable output from the system, this is usually not a problem. However if a significant part of the benefits of a system stem from reductions in resource degradation or other such indirect benefits, the issue of observability can be critical.
Many degradation processes are slow relative to the time frames used for most management decision making (e.g. dryland salinisation, soil acidification). In evaluating a trial, one requires the degradation to be continued under the old farming system for long enough for differences under the new farming system to become apparent. Historical degradation is not useful for this. Observation commences with the trial of the new system. Obviously, the slower the degradation process, the longer it will take to be convinced about differences in degradation rates. Unfortunately there are additional factors which further delay the confident recognition of any such difference. They include:
These sources of variability are overlaid on the trial, and so their impacts are confounded with any effect attributable to the new farming system. Spatial variation is always an issue for interpretation of trials, but the combination of variation in space and time which affects observations of long-term trends in soil degradation makes them particularly difficult to interpret. At the very least, they increase the duration of the trial necessary to reach confident conclusions. In the extreme, they may mean that a trial could never be conclusive. In either case, the prospective benefits of conducting a trial are reduced, potentially by so much that it is not worth conducting a trial.
Can we not circumvent this problem by telling the farmer about the impacts of the new system? Unfortunately, this is not sufficient. As noted earlier, farmers are wary of outside experts telling them what is best for them. In general, this wariness is well-founded. It is more difficult than most realise to recognise and account correctly for the many subtle and interacting factors that determine the impact of a technology on any individual farmer’s welfare. An obvious example is advice based on biological or physical considerations, without adequate attention to economics. In general, farmers will not believe what we tell them they should do. They have to see results for themselves to be convinced. Highly credible information sources, such as respected individuals, will help to promote trialing of an innovation, but their advice will not almost never be accepted as a substitute for a trial.
A practical demonstration on another farmer’s property can be convincing, but even then the farmer will not be convinced if the demonstration is in a situation which is too different from his or her own situation. Farmers are understandably wary that results from a remote trial may not apply to them. This could be due to factors such as soil differences, topography, labour, scale, or machinery. Indeed, bioeconomic modelling shows that the optimal farm management strategy is often highly sensitive to differences in these factors.
Lindner et al. (1982) demonstrated the importance of distance to information source as a determinant of adoption, showing that farmer adoption of a particular innovation (trace-element fertilizers) decreased with increasing distance from the office of the department of agriculture. This is likely to be due in part to farmer perceptions about the information’s local relevance.
The Challenges in Achieving A Perception of Technical Soundness
A fundamental challenge is to ensure that the system is, in fact, technically sound. Does it in fact deliver with sufficient reliability the biological and physical benefits being sought? A common difficulty in this regard is reliable establishment of new plants. Self-regenerating annual pasture species, shrubs and trees can all face difficulties in this regard. Usually, the problem is not whether it can be done at all, but whether it can be done on a commercial scale at an acceptable cost.
Another problem relating to actual technical soundness is that in some cases we may wish to promote a system before we have comprehensive scientific evidence about its effectiveness. Salinity in low to medium rainfall areas of Western Australia is a case in point. We know in general that establishment of perennials are likely to help reduce the rate of rise in the saline water table. However we are unable yet to give advice on where in the landscape and at what density on a particular farm a given number of trees should be planted to maximise their impact on the water table. Nevertheless, salinity is perceived to be a major threat, so tree planting is widely endorsed and promoted. It is true that many trees have been planted, but it is widely believed that the numbers planted so far are much less than the numbers that would be needed to fully address the problem (e.g. Bartle et al. 1996; Anon. 1997).
Another example with some similarities relates to biodiversity. For a variety of reasons, we are unable to give clear advice about the farm management practices that should be recommended to enhance biodiversity. The reasons included (a) uncertainty about what impacts different farming practices have on biodiversity, (b) ambiguity about how biodiversity should be measured, and (c) ambiguity about how much diversity is enough (e.g. Main 1997).
Technical soundness can also be greatly affected by the quality of implementation by farmers. Unfortunately this is most likely to be true for complex farming systems, for which the risk of poor implementation is higher. For example, Garcia et al. (1995d) recorded that among upland farmers who had adopted hedgerows in the Philippine province of Palawan, almost half had used an intra-row spacing between plants of one metre or more. They commented that,
"Plants in a contour hedgerow are supposed to be very close together to effectively obstruct the flow of runoff, thereby collecting the eroded soil at the base of the hedgerows. The wide distance between plants in a hedgerow would, therefore, minimise the effectiveness of the hedgerows in controlling erosion." (p. 69).
If implementation is poor, it not only means that current results from the system are poor, but it also creates the risk that farmers will wrongly draw negative conclusions about the system in general, leading to disadoption. A further possible negative spin off is non-adoption by other farmers who are standing back and watching for successful results. We know that a large proportion of farmers do wait to observe whether innovative farmers successfully apply new practices before attempting to test the practices themselves (Abadi Ghadim et al. 1996).
Finally, the farmer’s perception of technical soundness is also affected by the observability of results from trials of the system, as discussed in the previous section. For technologies addressing processes of slow degradation, it may be a very long time indeed before a farmer’s uncertainty about the soundness of the technology is sufficiently reduced to prompt widespread adoption.
The Challenges in Meeting Farmers’ Objectives
Making the system profitable
The earlier quotes from Lindner (1987), Cary and Wilkinson (1997), and Sinden and King (1990) emphasise the importance of ensuring that the new system is profitable. In this context, "profitable" means that the new farming system is economically superior to the current farming system. It is not sufficient for it to generate benefits in excess of input costs; it must also cover opportunity costs - the profits from alternative methods of resource use which must be foregone in order to use the resources in the new way. Thus the hurdle is higher than sometimes recognised by scientists.
The discussion thus far has focussed on perceptions, but the only way to create enduring perceptions of profitability is for the system to be profitable in fact. With large amounts of energy and resources devoted to persuasion, it may be possible to temporarily create an overly-optimistic perception of a system, but once farmers have personal experience with the system, they will certainly put more weight on this than on any amount of persuasion or exhortation. Thus, successful trials or successful adoption are necessary for favourable perceptions in the medium to long term.
One potential threats to the actual profitability of a new, complex system is that there are likely to be substantial costs in establishing and maintaining the new system. This is particularly true of systems involving trees. Even if labour and finance availability are not absolutely constrained, their high requirements are costs which must be at least offset by the benefits.
There may be additional negative impacts of the new technology, such as,
These problems, and any others, are not necessarily fatal, but they must be set against the expected long- and short-term benefits of the new system to reach a realistic assessment of its value.
Determining whether the system is profitable
We have discussed the farmers’ perceptions of whether a system is profitable, and some factors relating to whether the system is actually profitable. A third, related point is the capacity of scientists or extension agents to determine whether a system is profitable in order for them to be able to tell whether they should promote it or seek to modify it further. For a complex farming system, this is a much more difficult task than often recognised. To illustrate, Table 1 shows a list of factors which influence the profitability of legume-based farming systems (adapted from Pannell 1995). It should be clear from this extensive list that simple economic assessments of complex farming systems are likely to be of little value, or even of negative value if they seriously mislead (as is not unlikely).
Even if we are aware of all of these factors, uncertainty about their quantitative magnitudes is a substantial problem for new complex systems. As noted earlier, because some of the processes are very slow and are overlaid with high levels of variability, it can be difficult to attribute causality to a new farming system, even if benefits are actually being generated. In other words, the rate of reduction of uncertainty over time is low. This is true for scientists/agronomists evaluating the system as well as for farmers.
Table 1. Factors affecting the relative profitability of legume-based, dryland farming systems in areas of Mediterranean climate
1. Short term
profit factors
1.1 Legume grain yield (depends on weather, soil type, weeds and
so on)
1.2 Legume crop stubble (post-harvest residue) production and
feed quality
1.3 Pasture production level, quality and timing
1.4 Yields of non-legume crops and pastures
1.5 Input costs
1.6 Output prices (for legume crops, livestock, livestock
products and non-legume crops)
2. Dynamic
factors (short to medium term)
2.1 Nitrogen fixation by legumes and yield boost from other
factors (e.g. disease break, improved soil structure)
2.2 Pasture density
2.3 Legume crop disease
2.4 Stubble management for crop seeding
2.5 Weed control
2.6 Tillage method
2.7 Carry over of nutrients
3. Sustainability
factors
3.1 Herbicide resistance
3.2 Soil degradation (acidification, organic matter decline,
erosion, nutrient decline, non-wettability)
3.3 Pasture legume persistence
3.4 Pasture establishment costs
4. Risk factors
4.1 Yield variability
4.2 Price variability
4.3 Yield/price covariance
4.4 Flexibility of the enterprise in response to changed
conditions
4.5 The farmer's attitude to risk
5. Whole-farm
factors
5.1 Total crop area
5.2 Machinery capacity
5.3 Total feed supply (timing and quality)
5.4 Feed requirements of livestock on hand (timing and quality)
5.5 Finance availability and cost
5.6 Labour availability, quality and cost
5.7 The farmer's objectives (profit, risk reduction,
sustainability, leisure)
5.8 The farmer's knowledge and experience
Heterogeneity of farm situations
It should not be thought that there is a single farming system that would apply across all farming regions, or even on all farms within a region. The reality is that optimal farm management practices depend on a wide range of factors (e.g. Table 1) which can vary markedly from farm to farm. Thus farmers’ responses to a new innovation will vary, not just because the farmers have different attitudes and beliefs but also because their farms vary so much in factors such as total area, soil types, soil fertility, machinery availability, financial resources, climate, weeds present and labour. Thus the scientist’s aim can only be to influence farming practices in the aggregate, recognising that the biophysical and human responses will vary markedly between farms.
The timing of benefits and costs
Farming systems based on trees or shrubs are usually characterised by high up-front costs, and benefits that occur some time in the future. If farmers have to borrow money to pay the up-front costs, it is obvious that any direct comparison of the up-front costs with the eventual benefits will not be valid without allowing for the cost of interest. Even if a farmer has savings available to be invested in the system, this implies that interest that could be earned on the savings will be sacrificed. Apart from possible differences in the relevant interest rates, there is no conceptual difference between having to pay interest and having to give up earning of interest. Both would have the same impact on the decision of whether to invest in the new farming system. This is a simple version of the rationale which economists use for discounting future benefits in order to make them comparable to current costs.
There is some controversy about the practice of discounting, with some arguing that it discriminates against future generations by discouraging investments with long pay-off times (e.g. Pearce and Turner 1990). This is a complex, philosophical argument about what is in the long-term public good. However we shall side-step the problem here because of the key finding that individual adoption decisions depend mainly on a farmer’s private self-interest. For a private individual seeking to maximise their own financial welfare, discounting is absolutely uncontroversial, but it does serve to further raise the hurdle for scientists seeking to promote farming systems with high up-front costs. This is particularly a problem in developing countries where private discount rates are likely to be extremely high due to poverty (causing future benefits to be less significant than current survival) combined with exploitive interest rates charged by small local money lenders.
Social or institutional issues
There are many examples of social or institutional issues which influence adoption decisions (Rogers, 1995). Examples which may be relevant to complex farming systems designed to enhance sustainability include the following:
Example: Hedgerow Intercropping in the Philippine Uplands
In several places in the foregoing discussion, examples have been drawn from the adoption of hedgerow intercropping in the Philippine uplands. Because this relates to a farming technology very consistent with the idea of mimicking natural ecosystems, and because it is such an extreme and classic case, it bears further examination here.
The main motivation for promoting hedgerow intercropping is the problem of soil erosion, which occurs at high rates throughout the Philippine uplands (Nelson 1994, Fujisaka 1994). Agriculture in the uplands has maize and upland rice as its major products. It occurs almost entirely on unprotected, steeply sloping land. This approach to farming, combined with very high rainfall, has highly predictable consequences for rates of soil erosion, with substantial on-site and off-site costs.
Various technologies have been put forward as potential solutions to the problem, but by far the most prominent has been hedgerow intercropping. This has been the subject of research and extension programs by the Philippine government (Gerritts 1996), foreign non-government organisations (Garcia et al. 1995b), and foreign aid organisations. It involves planting of leguminous shrubs or other suitable plants along the contour to act as a barrier to soil movement. Alleys are planted to crops and hedgerows are trimmed, with trimmings used for mulch or animal feed. Terrace formation occurs rapidly when the alleys are ploughed. Despite a major investment in extension and promotion of versions of this farming system throughout the Philippine uplands, farmer adoption has been minimal (Fujisaka 1994).
Garcia et al. conducted a series of farmer surveys in different parts of the Philippines to attempt to understand the reasons for this failure (Garcia et al. 1995a, 1995b, 1995c, 1995d, 1996a, 1996b). They found that the reasons are complex and multifaceted, with different combinations of factors being important in the different sites. Indeed it appears that in this social and physical environment, sustained adoption of hedgerow intercropping is a fragile goal. There are many possible reasons for failure, and the results of Garcia et al. seem to indicate that if even a small number of them are present, the system is unlikely to be adopted.
Among the reasons identified as being contributors to the failure of one or more of the extension programs were the following:
Meeting the Challenges
The challenges we have discussed raise the question of how one should design a technology to meet the challenges, minimising their negative impact on adoption. One could work through the issues and attempt to identify the best response to each. This is not done here because, without considering specific problems or technologies, many of the recommendations would be obvious and superficial. However, the following observations address the key relevant points.
Developing a system which is technically effective is necessary but not sufficient. The system must be economically profitable at least in the long run to be seriously considered by most farmers. Scientists need to work closely with farmers and economists to meet this challenge.
Increasing the physical productivity of a new technology is not the only way to affect its profitability relative to current practices. There are a range of institutional changes which can affect profitability, including subsidies, taxes, schemes to share costs and benefits differently, information programs, legal standards backed with penalties, and schemes to alter or enforce individual rights. Policy makers need to consider implementing this type of change in order to make a new technology sufficiently attractive to farmers. For example, in developing countries, adoption may be particularly enhanced by policies that reduce interest rates, or that address insecure or inequitable land tenure.
In some cases, a key problem is deep uncertainty about the technology - demonstrating its value quickly enough and convincingly enough. This is especially true for slow, indirect effects, such as impacts on the water table. Scientists need to consider ways to increase the observability of results from trials of such technologies, ways to help farmers recognise that the technology is what is causing the results, and ways to allow results to be observed sooner.
Moral suasion and peer pressure can be very useful in raising farmer awareness, but should not be relied upon to achieve adoption of innovations which are not clearly beneficial to the individual farmer. Any success they achieve is likely to be temporary unless the new technology is actually more profitable.
Even a simple new farming technology is subject to many of the difficulties that have been discussed in this review. For complex new farming systems, it is hard to overstate the magnitude of the social and economic challenges to be faced in achieving widespread and sustained adoption by farmers. The aim here has been to promote realism, rather than discouragement, in the belief that only by acknowledging and understanding the problems can progress be made.
Acknowledgements
The author is grateful to Don McFarlane, Dan Carter, Steven Schilizzi, Nicole Glenn, Sally Marsh and Simone Blennerhassett for helpful comments on an earlier draft, to Ted Lefroy for his helpful input to the paper (including the paper’s title), to Bob Lindner for help and inspiration and to the Grains Research and Development Corporation and the Rural Industries Research and Development Corporation for funding of related research projects.
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