If agriculture is a sector of great importance in the most developed countries, in the poorest countries it is the great source of subsistence. The food crisis that began in 2022 has caused us to ask ourselves: What is the importance of agriculture in the economy?
Since agriculture provides food for the whole world, it has become a basic sector worldwide. Proof of this is the current growth in food demand in a clearly unfavorable context.
The war in Ukraine, considered the breadbasket of the world (it produces 12% of the calories consumed worldwide), the droughts and storms caused by climate change and the economic slowdown caused by COVID-19, have greatly complicated the food landscape.
And it is that the demand for food and the productivity of the agricultural sector largely explain the social and economic development of nations.
agriculture and development
It has been repeatedly found that if agriculture is unable to meet food needs, economic growth suffers. In other words, a growth in the amount of food supplied contributes to the economic progress of a country.
Therefore, a strong agriculture, with solid foundations, is essential, which, beyond traditional self-consumption, allows food to be provided to residents of urban centers.
For this, it is necessary that the growth of industry and the tertiary sector be accompanied by a surplus of agricultural production. The more advanced the technology applied to agriculture and the greater the productivity of the field, the more feasible it will be to respond to the enormous demand for food.
The problem arises, as it happens in 2022, when the supply of food grows at a lower rate than the demand for it. All this ends up causing social tensions, conflicts, excessive price increases, falls in investment and even famines.
A problem that has been detected in a good number of developing countries is the lack of foreign exchange earnings to import the food they need. All this forces them to depend on their own national agricultural production to supply their population.
Similarly, there is a close relationship between agriculture and factors of production such as labor and capital. A developed nation is characterized by employing a low percentage of its population in agricultural work, thanks to the wide productivity of its rural areas. Therefore, it can free up population to work in the industry and services sectors.
In contrast, developing countries concentrate around 60% of their inhabitants in the agricultural world. This prevents assigning workers to services and industry. The reason for this situation is largely due to the lack of productivity. For this reason, the need arises to incorporate machinery and technical innovations into the field.
Agriculture as a tool to combat poverty
As we pointed out earlier, the growth of agricultural production generates economic prosperity. Thus, faced with an increase in the supply of food, the population is well supplied, the price of food decreases and the feared specters of inflation recede.
Agriculture as an economic activity can be a great tool in the fight against poverty. In this sense, the World Bank points out that agriculture is between two and four times more effective than other activities in improving the economic conditions of the most disadvantaged. And it is that, up to 65% of adults in poverty are engaged in agriculture.
To give us an idea of the importance of agriculture in certain nations, in 2018, this sector accounted for up to 25% of economic growth in some developing countries.
It is evident that in developing countries and in less developed countries it is necessary to address agricultural strategies. To do this, it is necessary to promote inclusive growth and introduce technical innovations that make its agricultural sector more productive.
However, 2022 has arrived fraught with challenges and risks to food security. The war in Ukraine, the leading producer of cereals in Europe, the pandemic caused by COVID-19 or the extreme weather resulting from climate change are the main threats.
2022: food security at risk
The effects of extreme weather are already being felt in agriculture and thus in food production. In China, last year’s rains caused a significant delay in harvests, while in India, the world’s second largest producer of vegetables, the extreme temperatures are a real threat to its agriculture.
There is not a corner of the world that is spared the difficult moment posed by adverse weather. A clear example is the United States, where the lack of rainfall could seriously affect its famous wheat belt. All this without forgetting the Horn of Africa, where droughts pose a terrible risk of famine.
If the outlook was not particularly promising, the outbreak of the conflict in Ukraine has had harsh consequences on the world economy. The numerous economic sanctions imposed on Russia have caused a more than notable increase in the price of fuel. By increasing the cost of fuel, the price of transport becomes more expensive and, as a result, food prices skyrocket.
Even fertilizers, so necessary in agriculture, have been affected by the war in Ukraine. The reason is that fertilizers are key in agriculture, as these substances have made it possible to multiply agricultural production by three.
Well, Russia covers 20% of nitrogen fertilizers worldwide and approximately 40% of potassium fertilizers together with Belarus. But Western sanctions on Russia have kept such an amount of fertilizer off the market.
It is clear that the shortage of fertilizers has caused an increase in their prices and the consequent increase in food prices.
Another devastating side effect of the war in Ukraine is Africa’s dependence on Russian and Ukrainian wheat. Up to 14 African states get more than 50% of the wheat they need from both countries. With Russia economically isolated, Ukraine’s ports closed by war, and scarcely productive arable land, the African continent may face famine.
No less important is that, due to the war, in the present 2022 it has not been possible to sow the fertile Ukrainian fields, which could further aggravate the situation in 2023.
Faced with a threat of great magnitude, the answer could be found in providing food programs with sufficient economic resources. Along with this, reduce the use of fertilizers and bet on more than promising agricultural techniques such as organic crops.