Food security and the principle of comparative advantage

This article is published in and is part of our Vol 1. Issue 4 Journal with a special focus on Food Security - Editors

The world at large, individual nations and blocks of countries had been, for the past couple of centuries operating broadly on the Principle of Comparative Advantage for International Trade. Apart from the devastatingly harmful and ultimately failed attempts in a few countries for relatively short periods of time, most countries have chosen to specialise on products over which they had comparative advantage to earn the income necessary to buy the rest from other countries. Yet, this global model, tested in times of war and peace, recessions and boom times, have experienced a life-threatening shock with the advent of COVID-19 as countries closed their borders, thereby disrupting trade and commerce.

Though, countries are slowly opening up, with China slowly starting their factories even in March and going into full mass production in April. The ramped-up status of the Chinese factories is perhaps best evident by the huge numbers of medical items gifted by Chinese philanthropist Jack Ma to so many countries around the world. As countries slowly open up, it is very much anticipated that the global order of trade will slowly re-emerge, and countries will again focus on where they have comparative advantage.

However, the GDP share from agriculture is only 1.3% and the combined average of the Primary Sector in the 5-year period 2014-2015, is only 5%. Therefore, even though the principle of Comparative Advantage will continue to guide us, as a nation we must prepare to grow more, grow better and grow smarter. Not only for times like these but also as a matter of general principle.

Comparative advantage in agriculture production

This island nation of ours, the Maldives, is a boon and a blessing in so many ways. Straddling the equator with a sunny, year-round temperature, bypassing the two hurricane prone zones of Arabian Sea and the Bay of Bengal, we also call our own almost a million km of rich EEZ waters. It is indeed a haven on earth and the sunny side of life to which all aspire to visit for fun and frolic.

While we are rich with much blessings, the geography of the nation also imposes limits on industries and curtails opportunities. Of these limits, the ones on economically viable agriculture output is one of the most significant.

Our nation of 1,200 islands and many more islets and sandbanks are spread over 820 km north to south and the average size of island is less than 1 sq km with only a handful over 5 sq km. The islands are low to the sea with average height at below 1m.

Consequently, the soil is poor and the water table is saturated with sea water and shallow. Limited space for agriculture, also means that fields cannot be left fallow for crop rotation resulting in an over dependence on fertilisers to achieve yield. Unsurprisingly they require additional fertiliser in the following year to achieve the same output. Additionally, labour is expensive, and entrepreneurial capital for agriculture, difficult and expensive to obtain. Logistics is a basic challenge of the Maldivian geography for movements of all goods and services, especially for fresh agricultural produce. Unsurprisingly, therefore, reaching for advantages in large scale production is not a viable concept that comes into play.

Consequently, the GDP share of Agriculture while at an average of 1.3% today, have been slowly declining from 1.4% to 1.2% today. Meanwhile imports of agricultural products into the country have been consistently increasing going from MVR 302 million in 2014 to MVR 437 million in 2018, an increase of 44% in the 5 year period.

Import of agricultural crops 2014 - 2018 Mvr (in millions)

Source: National Bureau of Statistics

The increasing imports of agricultural items, as seen in Graph 1, include and consist mainly of the crops most popularly grown in the country as can be seen in Table 1. As a nation we have imported many times the quantity of major agricultural items grown in the country.

In 2018 we imported 20 times the quantity of watermelons, 19 times the quantity of chilies and mangoes (Table 1).

Table 1 Import and grown quantity of selected fruits and vegetable 2018

Source: National Bureau of Statistics

The major agricultural product which we are most competitive looks to be papayas as we have imported only 0.23% of the home-grown quantity.

It is important to note here that much of the above are air-lifted with air cargo rates, normally close to a USD 1 per kg, and that a 15% import duty is paid on all such imports.

Entrepreneurs are sourcing these items, paying to transport them to sea or airports, paying freight (air or sea) and duty at the border, and have increased the trade by 44% over the past 5 years. This clearly speaks of how much more competitively they are grown elsewhere and the numbers in Table 1 offer stark evidence of this.

Being smart about food security

While the figures in Table 1 belie the real challenges in fostering and expanding a competitive wide-spread agricultural sector in the Maldives, it does not and should not be construed as a call for giving up attempts at local production and harvesting. We should, as a nation, instead, have a strategy for sustainable agricultural production that is smart and innovative. One that takes into account the realities on the ground, not ignore them.

Understanding the reality and the economics of agricultural production is the first step in understanding what can be done and what need not be attempted. Being smart in the selection of the types of products targeted will allow us to be more prepared and less dependent. But our efforts need to be based on smart thinking and innovative flair.

We must design and nourish smart and innovative solutions to enhance our food security and they need not be one single strategy nationwide. For optimum results it is best that strategy and tactics differ at different levels.

1. State level interventions

• The government has announced 44 islands to be specialised for agriculture development. These islands must be developed using smart, innovative methods and using modern day technology to generate harvest that are more competitive. Products must be selected, and technology decided to offer scale of production and use of locally available resources to maintain production.

• Using naturally available organic elements like fish waste as the basic ingredient for fertiliser production, might indeed be something that offer large potential and require urgent attention if food security is to be taken seriously.

2. Island level interventions

• Instead of allocating every available piece of land for tourism or guest house development, islands need to allocate empty spaces for growth of trees that have proven their hardiness in the local geography. Breadfruit and mangoes are protein rich, easy to grow items suitable for the Maldivian soil. Because they take time to mature, there need to be a long-term, sustaining strategy with long term incentives.

• Bananas, papayas, varieties of cassavas and other similar items mature sooner, are easy to grow, and are healthy nutritious products. Because they mature faster, the nature of incentives could be different for those interested to cultivate them.

• There are many homes in islands, unfortunately left empty or with very few people as many householders have moved to Malé for employment and other reasons. Some of them are considerably large plots of land and can be brought into productive use with minimal investment and time.

• Coconut groves have to be seen as a lifeline, an asset to the family who owns the palm and to the island that hosts them. They are ecologically important to anchor the soil of the island especially on the beaches. The nation, islanders and palm owners need to value the coconut palm as more than a source of a one-off-payment for the horrifying and still continuing sale of these valuable palms to beautify resort islands.

3. Household level interventions.

Pomegranates, guavas, water apple (jamburoalu) and other such fruits used to be plentiful in the backyard of each household. Papayas, and moringa are easy to grow in back yards and are healthy to boot. Households need to be made more aware of their utility and encouraged to make space for their growth in the backyard instead of clearing the space for a common room.

4. Apartment level interventions

At the level of apartments with small balconies too, production of easy to grow items need to be attempted. Chilies, mint leaves and local cabbage are easy to grow, and quick to harvest and good to eat.

When such fruits and vegetables are grown at the island level, in the home garden or balcony, they complement the home dinner table and offer additional nutrition and protein and more importantly result in real savings on food expenses. When offered to a neighbour or friends, it helps their diet and result in savings on their expenses. While modest at the household level, at an island level, at the national level such effort and such harvests can offer much nutritional benefit and result in considerable savings on foregone expenses nationally.

5. Smart interventions

Modern developments in hydroponics has allowed for vast farms, including vertical farms in urban centers. In our crowded capital too, there exist today, local entrepreneurs who have for some time now, been practicing smart hydroponics effort and indeed making it a modest yet thriving business.

Being smart and being innovative about the methods and the selection of items to grown can make a large difference in deciding whether it is a hobby that will make the dinner table or indeed whether it can be transformed into a small business that can be fostered and slowly expanded.

The fact that larger countries, with rich nutrition soil, cheaper labour and indeed cheaper cost of capital will and does generate advantages of scale in production of basically anything, including agriculture, does not mean that we should not attempt to grow more and better healthy local produce.

Aside from the pride that follows naturally while consuming products that is self-produced, the effort will enrich the dinner table and collectively lead to reduced expenses at the national level. Smart technology and modern methods might indeed lead us to be competitive in products that we have not even thought of today. Yet, the reality on the ground need to be learnt and appreciated before we can design strategies to overcome them.