Business with farmers

Business with farmers

The government has announced its intention to purchase farmland from the country’s farmers. For an idea to be meaningful, desired outcomes must be possible. This requires evaluating each job independently, but always from the perspective of building large groups to achieve economies of scale in management and shared infrastructure. Economically, the worker’s incentive to own land is a minor matter; To make the enterprise a sustainable reality, it is necessary to provide the appropriate technological package for each product and support in the promotion of machinery and cooperative channels for marketing.

Affordable price is negotiable. The land is worth what is expected of it. Commercial prices per unit of area include speculative content linked to the probability of finding more profitable uses than those identified today. No one knows what the future will be like, but ideal rules for government procurement require forecasts of production, price, cost and long-term exchange rates.

The purchase price of the land should be similar to the difference between the sum of revenue on the one hand and the sum of investments in fixed assets, costs and expenses on the other for many years to come. There should be no significant tax on the sale of assets in this scheme as a Government policy is in place to manipulate cash flows to create value. In animal husbandry, the net value of the land should be calculated and compared with the result in agriculture. Several scenarios should be considered for both activities. The land should be paid in a relatively long term and this value should be included in the accounts with interest.

The difference, possibly in favor of agriculture, must be weighed against the benefit of other uses of the committed public resources other than those necessary for security, justice, education, health and infrastructure; the rural population should in any case have these services.

As a result, the entire financial plan and investment opportunities of the State should be reviewed with social and economic criteria. This saga would close the field to others. The amount of resources required to purchase 3 million hectares at an average price of $15 million per hectare would be more than 10% of Ulus’ annual budget.

Many other financial efforts would follow for planting, harvesting, and selling. In addition, insurance is required. This effort should not be undertaken without a high probability of success. Doing this with a commitment to the future would be worse than financing it with bonds: Insufficient growth rates resulting from the government’s policies on several fronts would not allow more room for maneuver in the medium term.

Among the key questions is that agriculture in today’s world is high-tech and labor-intensive crops in general require a lot of knowledge. In addition, the rural population does not necessarily have an agricultural occupation: slow economic growth since the 1980s is even likely to have not moved to cities, as they do not offer opportunities despite income and service differences. What the ruler intuited should not be applied without scrutiny.

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