Kuo Hua-jen / How can more income stay in rural areas? Seeking broader local production and local consumption
By Guo Huaren (Professor Emeritus, Department of Agronomy, National Taiwan University)
In the post-oil era, within twenty to thirty years our country may face a problem in which imported grain becomes difficult to buy, so there is no doubt that we need to buy time to restore the agricultural self-sufficiency rate and productivity. However, our agriculture is facing the difficulties of an aging farming population and the deterioration of farmland.
Maintaining sufficient, intact farmland requires good national land planning and execution, while healthy farmland requires gradually abandoning pesticides and chemical fertilizers, with the hope of fully implementing ecological organic farming methods, so that in the future, even without pesticides and chemical fertilizers, farmland can still sustainably support production.
Keeping young people in the countryside is even more difficult. It is hard for young people to stay in farming, mainly because farming makes it difficult to support a family, and secondly because the countryside is depressed and living functions are seriously insufficient. Apart from policies that encourage farming and raise farming income, the solution lies in how to revitalize the countryside, create diverse employment opportunities, and accumulate rural wealth. In this respect, the revitalization of rural business (rural business, countryside business) is indispensable.
Local production for local consumption is the key to rural wealth
Rural industry is usually divided into three levels, namely primary agricultural production, secondary processing production, and tertiary agricultural services. Some Japanese scholars have proposed the six-level industry, which is the addition or multiplication of the three levels of industry. However, if rural areas are to be regenerated, in addition to revitalizing these three levels of industry, a prerequisite is also needed, namely local production for local consumption.
In six-level industry theory, local production for local consumption is incorporated into the broad sense of tertiary industry, but this concept is not merely about eating locally produced food. It is the key to the interdependence of industries at all levels that can create rural wealth, and it is necessary to separate it out from tertiary industry.
The foundation of rural industry is the use of sunlight for agricultural production, the production industry that turns solar energy into products. The scope of agricultural services is quite broad; those directly related to agricultural production are the various materials needed for primary and secondary production, agricultural machinery services, circulation of agricultural products, and various agricultural insurance services.
Service industries extended from agriculture also include rural dining and tourism, long-term care services, and so on, which are also indirectly related to agriculture. To put it plainly, local production for local consumption means that producers at all levels and service industries of all kinds do more of it themselves, and let outside enterprises earn less of the business.
Only when the countryside provides services itself will "net income" be greater
The countryside will always interact with the outside world. If the outflow of money in this exchange is higher than production income, rural wealth cannot be accumulated; if the external sales of rural products and services are higher than the inward transfer of outside products and services, it is easier for the countryside to save money. This principle is very simple.
For example, if the fresh and processed foods sold in the supermarket of a rural farmers' association are still mainly from outside, then the outflow of wealth is difficult to stop. If all the ingredients used in the rural food and beverage industry are locally produced, the money earned all falls into the pockets of local people. If fewer outside ingredients are used and local products dominate, then rural net income will be greater.
Similarly, if the mechanical parts and maintenance services needed for primary and secondary production can be done locally, this can also be considered the concept of local production for local consumption, and it is also a way to accumulate rural wealth. Recently, the Chishang Township Representative Council passed a self-governance ordinance to hold rice production loss compensation, which is the best illustration of agricultural insurance being handled by the locality itself, so that money is not taken away by outside insurance companies.
If long-term care services are set up in the countryside and it is stipulated that their food and nutrition services give priority to local ingredients and use a little less from outside, this can promote local production at all levels and certainly helps the sales of local agricultural products.
How to comprehensively develop rural industry, with the hope of sparking more discussion
Industries directly and indirectly related to agriculture not only accumulate wealth but also provide employment opportunities, and if done well they can revitalize the countryside. Once the countryside begins to revitalize and more and more people stay, demand arises for all kinds of industries other than agriculture. For example, family doctors, water and electricity, computers, teachers, department store retail services, and so on, which every household needs, will have a foothold, forming a virtuous cycle, improving living functions, and enabling the countryside to regenerate.
The main obstacle faced by such rural industry lies in the free economy. Suppose we look at the rural economy through reductionism and use only cost to measure the necessity of its existence. If outside materials and services are cheaper, then use those from outside, and there is no point talking about revitalizing rural areas. This is also the fundamental reason why the Swiss Constitution states in its agriculture provisions that "rural industry may deviate from the principle of the free economy when necessary."
The Council of Agriculture has shifted part of the regeneration plan funds previously mainly used to beautify the countryside to support ecological organic agricultural production. This is a correct first step. More importantly, it is necessary to think about how to comprehensively develop "rural industry," including how to eliminate obstacles from the free economy in laws and policies, how to balance urban and rural budgets, and, in local self-governance, how to build consensus and how to share economic growth.
This article is meant as an introduction, and it is hoped that there can be broader and deeper discussion to frame the quite important issue in agricultural transformation, namely the "three plus one" rural industry. (Thanks to Professor Wu Rongjie of the Department of Agricultural Economics, National Taiwan University, for guidance.)