Lester Brown, Seeds of Change, Praeger, 1969.  Chapter 7




            In the United States, private corporations are the most responsible for developing and spreading agricultural technology.  Multinational corporations look to be the means of institutionalizing and globalizing this transfer of technology. 

Prior to World War II, most agricultural research in the United States was government-sponsored, conducted by the Department of Agriculture and State Experiment Stations.  This research reached the people through county agents.  After World War II, private companies do most of the agricultural research in laboratories or experimental farms, having sales and services staffs serving to spread new technologies to American Farmers.  “Agribusiness has found it very profitable to invest in research and agricultural extension.  The large-scale entry of agribusiness corporations into these activities is in large measure responsible for the innovative, dynamic character of American Agriculture during the past quarter century.        

This process will most likely extend to poor countries as farm production depends more on purchased inputs and the portion of farm production marketed increases.  The technology transfer can occur in the form of products, trained personnel, or most importantly, through Fertilizer Production.


The Fertilizer Breakthrough


          In the early 1960s, M. W. Kellogg Company of Buffalo, New York, had a technical breakthrough in the production of fertilizer.  They had developed a means of synthesizing ammonia from atmospheric nitrogen at a third of the capital and operating costs.  Two other basic plant nutrients, phosphate and potash also experienced lowered costs due to new phosphate concentration techniques and richer potash fields.  Fertilizer use rose at 16 per cent a year in poor countries due to lowered fertilizer costs and attractive cereal prices. For example, the use of fertilizer in Brazil more than doubled in the 3 years following 1966.  In India, fertilizer use tripled from 1966-69.  Aiding the increase in fertilizer use was filed demonstrations by the Food and Agriculture Organization (FAO) of the United Nations. 

            The new technology promised lowered fertilizer costs allowing poor countries that can purchase new imports of fertilizer alone or with aid funds, to benefit.  “During the mid-1960, several countries, including India and Pakistan, received large loans from the United States Agency for International Development to finance imports of sorely needed fertilizer.  At the same time, the United States and the World Bank put a great deal of pressure on the two governments, especially the Indian government to encourage multinational corporations to invest in local production capacity….joint ventures between Indian and foreign firms were especially encouraged.”  These expansions lead to an increased market for U.S. fertilizer surplus.  Not all countries can attain a balance between imports and local production required to fully revolutionize their agriculture.  It is hoped that the transfer of technology through multinationals will be fixed in the long run.


Supplying Farmer’s Needs


            Once profitable to use, modern technology can increase the demand for many different farm inputs used.  Agribusiness can provide the necessary inputs needed, giving them an interest in the agricultural revolution.  In the United States, total spent by U.S. farmers on farm inputs was $21.5 billion in 1965, divided into $9 billion for feed and livestock from other farmers and $12.5 billion in purchases from the industrial sector (fertilizer, equipment, electricity, etc…).  It can be expected that farmers in poor countries will increase expenditures on these same inputs as time goes on. 

            The increase in farm equipment can be tied to advances in development.  The use of new seeds created a massive increase in demand for irrigation pumps and tube wells.  The use of pesticides has increased to protect the investment in high yield crops; this increase requires the use of more chemical sprayers.  Early maturing rice that matures during the monsoon requires mechanical drying. 

            Equipment and maintenance needs of farmers are often unmet by the government due to main reasons:  “First, farm equipment is spread so thinly that the cost of maintenance is often inordinately high.  Secondly, governments have aggravated this already bad situation by permitting the import of farm equipment from several sources.  This makes it virtually impossible to establish maintenance systems and stock spare parts for the many different makes and sizes of tractors and attachments.”

            Developing countries can overcome this by selecting several farm-equipment manufacturing firms to generate competition in building a local supply and service organization.  This organization could lay the groundwork for farm-equipment assembly and even a manufacturing industry.  


Processing Farm Products


            New investment is to be had in the processing of farm products or through their use as raw materials.  “A lack of processing industries often imposes unnecessary constraints on a country’s agricultural development…Developing countries can obtain the necessary technological and marketing know-how by encouraging multinational agricultural processing and manufacturing firms to invest locally”

            Example:  The Overseas Agricultural Development Corporation was formed in Japan to supply farm inputs and technical assistance to developing countries.  With some 24 participating firms, they have projects in Indonesia, Thailand, Cambodia, and Malaysia.  The basic objective is to increase the production of feed grains, oilseeds, and other farm products for shipment to Japan, thus expanding overseas markets for Japanese agricultural equipment, fertilizer and other farm necessities. 

            Similarly, a Japanese-Indonesian agreement was reached to improve the quality of corn and associated techniques like drying, warehousing, transport, and shipping.  A Sino-Japanese meat processing plant in Taiwan exports pork produced with imported feed grains largely from the United States.  In Colombia, the United Fruit Company is working with farmers to develop a new banana producing area.  The company acts as the agent and adviser for some 260 private firms.  One significant contribution is it provides access to external markets through its global processing system.  In the Philippines, pineapple production more than doubled, from barely 100,000 tons in 1960 to 200,000+ tons in just 9 years later.  This was due to investments by firms such as Dole. 


Nationalism and the Multinational Firm


            Foreign private investment is growing rapidly.  “According to the “Survey of Current business, American”, American private investment abroad totaled $17 billion in 1930 and had reached only $19 billion by 1950 but then began to climb rapidly, rising to $50 billion in 1960 and $87 billion in 1966.”  Overseas investment of European and Japanese firms is rising, as is the portion of total investment going to poor countries.  Investment is going more into manufacturing than extractive industries.  “Sales of farm inputs and opportunities for new invest in food processing and related activities are increasing in the poor countries in close relation to the acreage planted to high-yielding varieties.” 

            The challenge lies in the multinational having to demonstrate an interest in the local economy, showing a willingness to invest for the long term.  For poor countries, poor countries must look at multinationals as an efficient means of technology transfer.  


Summarized by:  Donald Ripley