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9. Tunisia: The state, the peasantry and food dependence

The state and the peasantry
Consequences of state agricultural policy

Mahmoud ben Romdhane

The purpose of this chapter is to analyse state policy towards agriculture over the last two decades and its impact on the peasantry and agricultural production. The essential conclusions that emerge and will be developed, are that, with the exception of the market gardening and fruit sub-sector, in which the state made major investments and where the beneficiaries of investment in irrigation gained substantial advantages. Tunisian agriculture has been used as a reservoir from which to extract an increasingly large surplus to the benefit of extra-agricultural capital. As a result of the continuous depreciation of the main agricultural products' prices the peasantry has been unable to save enough to finance productive investment, and capital. 'the bearer of capitalist rationality' has simply fled agriculture whose share of investment has diminished drastically period by period. Consequently, agricultural production has improved only extremely slowly and, from being an agricultural surplus country. Tunisia has gradually become a deficit country, particularly in strategic food products (cereals, milk, sugar for example).

This was the situation up to 1979. Since then, the food deficit has continued to worsen, but it seems that since 1980 there has been a turn-about in agricultural policy which is reflected both in a new emphasis on agricultural products and in the financial and institutional resources made available (or in the process of being made available) to farmers.

But this turn-around has not yet been taken up with the required determination. It remains in fact dependent. 1) on a domestic social situation in which urban actors' threat to reduce the margin of manoeuvre necessary for the implementation of a new agricultural policy is all the greater because the confrontation with them is occurring against a tense economic background; and. 2) on an international situation in which the downward fluctuations of international prices threaten to reduce the urgency of a policy of encouraging agriculture simply because the turn-around itself was dictated essentially by the sudden rise of the international prices of the leading agricultural products between 1979 and 1981.

But if this turn around were to succeed in establishing itself and giving way to a policy that did not exclude agriculture, is there not the risk of a deployment of capital in agriculture with all its attendant consequences - or alleged consequences: further concentration of landownership, development of the wage nexus and rejection of the peasantry? For if the policy, that for two or three decades has consisted in reducing the prices of the main agricultural products, has helped remove agriculture from the field of capitalist investment and keep it basically a world of peasants, a policy of encouraging agriculture may indeed lead to an improvement in the standard of living of the peasant masses and keeping them on their holdings, but it may also lead to an extension of the spatial and social area of capital within agriculture and the eviction of at least part of the peasantry.

That is the real issue in coming years: everything will depend on the concrete implementation of the new policy - if the turnaround does indeed prove to be permanent. In order to put an end to food dependence, two paths are practicable: one based on capital, out-and-out resort to mechanization and rejection of the peasantry, the other, on the promotion of the peasantry and the rural areas.

The state and the peasantry

With regard to agriculture in general and the peasantry in particular- in so far as four-fifths of agricultural production are provided by small and medium-sized holdings based on family labour- state policy has consisted, since the early 1960s, in systematically extorting a larger and larger surplus' except from farmers in the irrigated sub-sector. In fact, whereas farmers in the non-irrigated sub-sector have seen the prices of their products (cereals. Iivestock, olive oil) fixed by the state at a low level, farmers in the irrigated sector have received special treatment: in addition to enjoying sometimes very considerable higher land values, hitherto achieved at no cost to themselves, thanks to investments in irrigation carried out and financed by the state, the prices of their products (market gardening and fruits) are 'free' and have increased considerably.

Such a brief outline needs to be elaborated. First, farmers who have benefited from state investments in irrigation are a very small minority (some 20.000 out of a total of 355.000) and, among them, no more than 6.000 have plots larger than five hectares. Second, those who have undertaken irrigation works and installations at their own expense number some 30.000 and most of them have holdings of less than five hectares: the sole 'advantage' they derive from their situation is that they benefit from generally rewarding prices (in the sense that they include, in addition to the strict cost of production, a land rent and a 'normal' rate of profit). Finally, among farmers in the non-irrigated sector almost 4.500 have holdings larger than 100 hectares and, through the use of hired labour, they enjoy incomes several times higher than those of a medium-sized irrigated farm.

Holdings in the non-irrigated sector: state policy

State policy with regard to the 305,000 farmers in the non-irrigated sector in Tunisia (out of a total of 355,000) has consisted in continually reducing the prices of their products. In the early 1960s the state was already establishing specialized National Boards or Companies that monopolized the marketing and/or importation of agricultural products and thus provided itself with the institutional tools which were to enable it to carry on a policy of dictating the prices of the main agricultural products and extracting an increasing surplus from agriculture.

This role was entrusted to the Office des Céréales for cereal products; the Société Tunisienne des industries Laitières (STIL) for milk and dairy products: the Société ELLOUHOUM for meat; and (after 1967 Only) the Office de l'Huile for oil. Only the market gardening and fruit sector (to be examined later) was excluded from this process.

After the early 1960s, the state fixed producer prices for cereal and livestock (meat and milk) products at the beginning of each season and, after 1967, for olive oil. Since then the prices of these products have continuously declined.¹

Cereal prices: Between 1961 and 1972, producer prices for hard wheat, soft wheat and barley were changed only once- in 1967- when they were raised between 12% and 24.5%. Successive adjustments after 1973 and up to 1980 increased prices on average 50% for wheat and 80% for barley, but compared to the general wholesale price index or the manufactured goods price index, the changes look rather regressive. Over 18 years (1961-79), the general wholesale price index recorded an increase of 171% and the manufactured goods price index 165%. By deflating the nominal prices of cereal products by these two indices the following figures emerge: in constant prices, hard wheat fell from 4.2 dinars per quintal in 1961 to approximately 2.850 dinars in 1979, a fall of over 47%, soft wheat from 3.450 dinars to approximately 2.6 dinars, a fall of over 31 %, and barley from approximately 2.5 dinars to 2.050 dinars, a fall of over 22%.

This uninterrupted price decline reached such a level that few holdings succeeded in producing while realizing the rent and a profit margin comparable to that of other branches of the Tunisian economy.

From a Ministry of Agriculture study² relating to the production costs of cereals in 1975 - obtained from a sample of 262 holdings - we have prepared a table of the production costs of the three main cereal products: hard wheat, soft wheat and barley. Three types of holding varying in terms of their degree of mechanization were examined and compared with tranches by size of holdings -20 hectares. 20-100 hectares and + 100 hectares.

The results are summarized in Table 9.4 which distinguishes three production costs: 1) excluding rent and profit margin (estimated at 15%); in this case the farmer is treated similarly to a self-employed earner of the guaranteed minimum agricultural wage: 2) including profit margin, but excluding rent, which is treated as taken by urban capital but the profit margin is more or less the same as that realized in other branches of the economy (about 15%); 3) including rent and profit margin; in this case the cereal sector is not the object of any extraction of value, and landowners enjoy the fruits of their ownership in the form of rent passed on to the prices of agricultural products.

Table 9.1
Production costs of cereals

The results are not perfect.³ but they still reveal that: no type of holding, however mechanized and of whatever size, achieves, given the prices set by the state, a capitalist-type profitability (including land rent and 'normal' profit margin). Only some large holdings are able to extract a profit margin without however managing to secure the ground rent. The small and medium-sized farms fail to cover the production costs narrowly defined (except for the mechanized medium-sized holdings specializing in producing hard wheat), which means that the farmers and their family are earning less than the minimum guaranteed agricultural wage (SMAG).

Dairy livestock prices: As with cereals, the producer price of milk, fixed by the STIL, saw only 5 increases in 18 years. It rose from 48 millimes per litre in 1961 to 51 in 1966, 54 millimes in 1967.65 in 1973, and stabilized at 90 millimes per litre between 1976 and 1979. Its 'real' price (compared to the general wholesale, and manufactured goods price indices) fell, in constant 1961 millimes, from 48 millimes in 1961 to 31-32 in 1979, a decline of almost 50%.

According to a study conducted by the Ministry of Agriculture⁴ in 1976 - a year in which the milk producer price had just been set at 90 millimes as against 65 millimes in 1975 - the cost price of milk (not including any profit margin) varied between 91.4 millimes for an integrated stock farm and 114.7 for a semi-integrated stock-farm⁵ whereas at the same time the stock farmer was getting only 82 to 84 millimes per litre of milk delivered to the Centrale Laitière (Dairy Centre) in Tunis (90 millimes less six or eight to cover transport costs and various taxes).

Faced with this situation, the technicians in the Ministry of Agriculture were already writing as early as 1974:

Given the official price of milk... milk production still remains marginal and the rate of profit zero. The only incomes currently being earned by some producers marketing their production at the official prices can only arise from payment for family labour or the use of buildings that have already been fully amortized.... This explains... the lack of enthusiasm or even disaffection on the part of some stock farmers and..., the ever-growing deficit in milk and dairy products.⁶

And more recently in the framework of the preparation of the Sixth Plan, the sub-commission's Report on prices and marketing stated:

This price rigidity has had negative repercussions not only on milk production but also on the development of the sector since there has been a total abandonment of dairy farming... This is all the more serious because our imports of dairy products have reached unacceptable levels, placing a heavy burden on our balance of trade.⁷

Beef and veal: Although officially approved, the producer price for beef and veal has not been reduced; in relation to the general wholesale or the manufactured goods price indices it has even undergone some upgrading. Between 1965 and 1979, the price of one kilogram of cattle on the hoof saw a nominal increase of 167 % (rising from 221 millimes to 564 millimes) whereas over the same period the general wholesale price index rose by only 11 % and the manufactured goods price index by 91%.

But this rise in prices does not indicate an improved situation for stock farmers- far from it, for there has been a dramatic change in the structures of production of both cattle and sheep farming. Whereas until recently, the bulk of cattle fed free, getting most of their food intake from natural vegetation - meadows' pastures- stock farmers are more and more constrained, as a result of the reduction of meadows and pasture and the increase in the number of cattle, to turn to the market to purchase necessary feed for their herds.⁸ This led an official of a beef and veal development project in northern Tunisia to state that:

It is currently asserted that intensification of production must be accompanied by a reduction of unit production costs: this assertion is false since it is obvious that a bull fattened along the roadside costs less than a bullock fed rationally in a purpose-built unit. In fact, it is well known that producer prices are higher in countries where stock farming is most intensive.⁹

Moreover, Ministry of Agriculture studies show that cattle raising is not a rewarding activity. A note from the Office de l'Elevage et des Pâturages reads:

In order to estimate the production cost of a kilogram of fattened bullock meat, the various studies allow us to suggest a cost price of 0.476 millimes per kg of meat. The sale price for a profit margin of 10% would be 0.524 per kg. However, given the dues paid to middlemen, the Tunis market price ought to be about 0.575 D per kg live weight.¹⁰

But in that year (1976), the wholesale price of 0.516 was maintained until May 1979, despite the not insignificant rise in production costs.

Sheepmeat: Like cattle meat, producer prices for sheepmeat have risen faster than the general wholesale and the manufactured goods price indices without this rise reflecting any improvement in sheep farmers' situation. The change in the structure of production explains this fact since during 1976 the wholesale price was 691 millimes per kg whereas the cost price (not including profit margin and transport costs) varied according to the type of farming between 583 millimes and 791 millimes.

Olive oil: The regulations governing the marketing of olive oil were reformed in November 1967. From that date, the collection and export of all olive oils on the local market were entrusted to the Union Centrale des Coopératives Oléicoles (Central Union of Oil-growing Cooperatives). Armed with this monopoly, the UCCO (which subsequently became the Office de l'Huile (Oil Bureau)) was now the sole authorized purchaser of olive oil from the producers on the basis of a 'season price' fixed in advance. Between 1967 and 1979, the producer price rose from 45 millimes per kg of oil olives to 83 millimes, a nominal increase of 84%, whereas between these two dates, the general wholesale price index recorded an increase of 95%.

A Ministry of Agriculture survey on the production costs of oil olives during the 1976-77 season¹¹ on a sample of 363 farms reveals that the cost price of this product is much higher than producer prices.

On the basis of a cost including expenses for olive trees in production, young olive trees and the site value of the land (ground rent) but excluding both the financial expenses arising from loans incurred and a profit margin, the results reached by the survey were: expenses for olive trees in production, 36.8 million dinars: expenses for young olive trees. 9.5 million: for a total of 46.3 million dinars for a total production of 450.000 metric tons of olives, which represents an average cost of 109.2 D per metric ton. If a gross profit margin is taken into account (including financial expenses) comparable to that of the nonagricultural sectors, a minimum of 15%, the producer price for a metric ton of olives should be: 102.9 D x 1.15 = 118.3 D. That same year, however' oil-growers received only 66 D per metric ton.

In total, state policy towards farmers in the non-irrigated sector consisted in subjecting them to a brutal extortion of surplus labour, with the prices set only rarely covering production costs: not only are profit and rent not allowed for but the labour of the peasant and his family is paid below the SMAG. In this context. land ownership plays no more than an ideological role. It contributes to tying the peasant to his land and making him live a fiction, that of having the rent, which is in fact taken from him by urban capital. Deprived of rent and even of reward for his investments, the peasant is reduced to a role of underpaid home worker.

And the overall volume of the amount extorted from him by urban capital reaches immense proportions.

Amount extorted from agriculture: In order to estimate the amount extorted from agriculture, the year 1975 will be taken as a benchmark. Production costs - as determined by the UNA - will be compared to producer prices. Taking account of the UNA's production costs has the following advantages: 1) without exception, they all refer to a single year (1975) whereas the Ministry of Agriculture's costs refer to 1975 for cereals, to 1977 for olives and to 1976 for livestock: 2) for each product they provide a single cost whereas the Ministry of Agriculture provides multiple costs (four for milk, six to nine for cereals, four for sheepmeat): 3) they include the farmer's remuneration (profit) whereas the Ministry's costs do not take it into account.

It should also be stressed that, while the costs determined by the UNA generally appear to be higher than the Ministry of Agriculture's, this is essentially because they include profit and financial expenses whereas the Ministry does not. The production norms, quantity and unit price of inputs scarcely vary from one source to the other.¹²

Table 9.2 shows the production cost in dinars per metric ton of products for 1975, the production prices observed that year and the volume of the amount extorted per metric ton.

Table 9.2
Production costs and producer prices, by agricultural product (1975)

Taking account of total production for each of these commodities in 1975, the total amount extracted from agriculture that emerges, in 1975, is 54.815 thousand dinars. In the same year: agricultural production reached 340.7 million dinars and the value of the amount extorted to 194.1 million dinars: gross fixed capital formation reached 467 million dinars, amortizations 98.3 million dinars (21% of CCF) and net capital formation 368.7 million dinars. Gross fixed capital formation in agriculture reached 51.3 million dinars, which, assuming an amortization rate of 21.3%, gives a net capital formation of 40.5 million dinars, while in the manufacturing industry it reached 83.3 million dinars, which, assuming an amortization rate of 21.3% gives a net capital formation of 65.8 million dinars. In public utilities (education and training, public utilities, health and urban water supply) gross fixed capital formation reached 45.8 million dinars, which, assuming an amortization rate of 21.3%, gives a net capital formation of 36.2 million dinars.

With reference to these figures, the amount extracted from agriculture represents: 16.1% of total agricultural production and 28.2% of the value of cereal, stock farming and oil olives production: 14.9% of the country's total net investment: l 135,3% of net agricultural investment: 83.3% of net investment in manufacturing industries: 151,4% of net investment in public utilities. That gives an order of magnitude of the transfer of value that Tunisian agriculture bears each year.

Holdings in the irrigated sector state policy

State policy towards the 50.000 farmers in the irrigated sector has been quite different from that pursued in the non-irrigated sector. Not only have prices of fruits and vegetables risen continuously, but some 20.000 current farmers are. Owing to state investments in irrigation, enjoying an often considerable increase in land values and a water supply at prices at least a quarter of their costs

Rise in fruit and vegetable prices: Unlike other products whose prices have been fixed officially, the products of the irrigated sector (fruit and vegetables essentially) have been subject to a 'free prices' regime. And, unlike cereals, livestock products and oil olives, their prices have undergone marked increases higher even than those recorded for other non-agricultural products.

Over 14 years (1965¹³ to 1980) the fruit price index was above the general wholesale and the manufactured goods price indices and, compared to the base year 1965, fruit prices rose 3.08 times whereas those of manufactured goods and other products rise by a factor of two.

Prices of market garden crops have undergone a generally similar movement: between 1965 and 1979, they went up 2.44 times, but during the four years 1966.1968,1971 and 1972, their level was below that of the prices of other products, essentially due to large harvests.

Unlike the products of the non-irrigated sector, comparison of production costs and producer prices of fruit and vegetables shows that market gardening crops and fruit represent a rewarding activity in general, although from year to year, the prices of this or that product may collapse, either from the effect of a relative 'over-production' I especially for tomatoes and pimentos) or from the effect of massive imports (this is sometimes the case with potatoes and winter fruits).

A comparison of the costs¹⁴ and prices of the 13 principal fruit and vegetables (which represent three-quarters of the total production of these products) shows that while for potatoes, pimentos, oranges and apples the production cost is higher than prices, for onions, melons, watermelons, clementines, lemons, pears, peaches and grapes, the producer price is higher than the production cost and the profit margin varies between 6% and 167%.

Weighting the prices and costs by the quantities produced in 1975 shows that total producer prices were 55.2X0.200 dinars, total production costs 47.493.800 dinars, thus producing a profit of 7.786.400 dinars. The average profit margin after realization of the rent - for this was included in the production cost - is 16.4%.

Apart from 'freedom of pricing' which has enabled farmers in the irrigated sector to avoid suffering a transfer of surplus labour, the state has enabled some 20.000 of them to enjoy increased land values, sometimes on a very considerable scale. Of the 227.600 irrigable hectares in Tunisian agriculture in 1982. 151.400 were in private perimeters (meaning that their layout and equipment for irrigation were carried out by the private farmers themselves, essentially through the construction of surface wells) and 76.200 in public perimeters (laid out and supplied by the state from dams, pumping stations and deep wells).

While the private perimeters merit no particular attention in so far as the increased land values acquired by the plots reflect the investments made by the producers themselves, it is quite different with the public perimeters where state expenditure is estimated at 2.400 dinars per hectare.¹⁴ Although the laws governing the public perimeters]' suggest a contribution to investment costs of 80 to 600 dinars only per hectare, depending on the perimeters and the agronomic properties of soils (five to 25% of actual investments), they have not always been enforced.

Today, some 20.000 farmers thus benefit from increased land values gained from public expenditure at no cost to themselves. While some two-thirds of them have plots smaller than five hectares, 6.000 have holdings larger than five hectares; in several cases, the holdings even exceed 50 hectares. A ceiling on holdings has been proposed by legislation but it has still not been applied: thus a study of the lower Medjerda valley in 1977 shows that of 1.288 holdings belonging to private persons, and covering 8.922 hectares. 25 farmers (2%) held 2.250 hectares (24% of the total area) or an average of 86 hectares whereas the ceiling fixed by the law is 50 hectares.¹⁶

Of all agricultural sectors only the irrigated sub-sector has been encouraged by the state: between 1962 and 1971, investments in agricultural irrigation amounted to 80.6 million dinars (29% of agricultural investment), between 1972 and 1976. 23%, and between 1977 and 1981.254 million dinars or 43.6% were also devoted to it although the existing potential was greatly underutilized.

Table 9.3
Utilization of land in state irrigation schemes

* Irrigated area is the physical area irrigated.
+ Area cultivated includes both the physical area irrigated and the area cultivated more than once during the year.

Source: Enquête périmètres irrigués. Campagne 1981-1982. Ministry of Agriculture. Tunis January 1983.

Thus then, the intensification rate (which measures the ratio between the area cultivated and the irrigable area supplied) is only 56% whereas the accepted norm is nearly 130%. This manifest underutilization of existing potential is explained in part by the water shortages that sometimes occur at some dams but the major obstacle is represented by the structure of landownership Surveys have revealed the existence of an inversely proportional correlation between the size of holdings and their intensification rates. In the public perimeter in the lower Medjerda valley where the average size of holdings is 10-11 hectares, the irrigation rate is only 63%, whereas in that of Nebhana where the average size is 3.5 hectares, the intensity of irrigation is above 100%. This correlation is also confirmed within a single perimeter.

In the lower Medjerda valley the intensification rate up to 20 hectares is over 50% but above 20 hectares it is below 50%, reaching only 30% for holdings over 50 hectares.¹⁷

The situation in the private perimeters is generally better during the last three years the intensification rate has varied between 85% and 90% (as against 56% to 59% for the public perimeters) so that on average for private perimeters and public perimeters combined the intensification rate is 78%. Given the capacity available today irrigated perimeters' production could rise by 50%. Without even questioning the current structure of landownership (although legislation provides for that) by simply asking farmers, especially those owning over 20 hectares, to develop their land fully either by themselves or by hiring labour, the country's total agricultural production could be increased by 10 to 15% - even without any further irrigation capacity.¹⁸

In addition, greater respect for the purpose of the various perimeters would make it possible to reduce food dependence for livestock and sugar products considerably. While market gardening and tree crops take up a lot of space (122.000 hectares), forage crops and industrial crops (sugar beet) (23.000 hectares) are neglected, although there is the most urgent need for these.¹⁹

Why, of all the sectors that make up agriculture, is the irrigated sub-sector virtually the only one to en joy remunerative prices (including in addition to ground rent a rate of profit approximating that of other non-agricultural branches) and various inducements from the state?

The hypothesis that we adopt at this stage is that unlike other agricultural sub-sectors the state is here deprived of the essential weapon that enables it to extract a surplus What enables the state to set prices at a low level is the possibility of importing similar products at a price lower than the domestic price: this is the case with cereals, meat, milk and dairy products as well as olive oil which can he replaced by imported soya oil.

But, this recourse to imports that enables the state to exert pressure on prices is hardly possible for fruit and vegetables for, unlike other agricultural commodities, they are perishable, and between the place of production abroad and the final Tunisian consumer, the risks of damage are very high: generally those produced in Tunisia are priced much lower than in other countries: and transport, packing and processing costs arc often higher than the market value of those commodities

The state therefore has very little margin for manoeuvre in this area: in the framework of capitalist accumulation, it must ensure that these staples are produced at prices that are not too high since they represent a not insignificant proportion of the cost of reproduction of the labour force.

The only effective means available to the state is to increase production rapidly so as to avoid demand exceeding supply and the creation of a shortage (of which producers would take advantage to extract a superprofit) and - why not? - to bring about a situation of relative ever-production that would make possible a reduction in prices.

The tool it must use is irrigation since that alone can make possible a rapid intensification of production that would affect prices.

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