THE EFFECTS GP HiGHWAY EMPROVEMENFS QN AGRECULYURAL E’RGDUCTEON: AN ARGENTINE CASE SFUDY That: for flu Doqzmo of M1. D. MICHEGAN STATE UNIVERSITY Fredi D. Miller 1967 ”15-5“ °"-‘s“.‘ '31“:me LIFI’Vs'TP. Y Midi“, .1 State Um J'crsity This is to certify that the thesis entitled THE EFFECT OF HIGHWAY IMPROVEMENTS ON AGRICULTURAL PRODUCTION: AN ARGENTINE CASE STUDY presented by FRED DOUGLAS MILLER has been accepted towards fulfillment of the requirements for Ph 0 D. degree in ECOHOmiCS "‘3 [7/ '1’)_.‘ ____.__—- Date September 15, 1967 0-169 _v‘——-—————————-..~_....._ -_.~_-‘—~_ . _ _ '“o—_ I w-V-—-* , AA __ _..___.__——a~——_—‘. ABSTRACT THE EFFECTS OF HIGHWAY IMPROVEMENTS ON AGRICULTURAL PRODUCTION: AN ARGENTINE CASE STUDY by Fred D. Miller Historically, highways have been evaluated by engineers. This situation has been unsatisfactory to many economists and, as a result, the past decade has produced a noticeable increase in contributions to highway studies from economics. The expanded interest, however, has led to dis— agreements about which benefits and costs should be included in the analyses, obscured some of the direct relationships between roads and economic benefits, and, consequently, cast doubt on the meaning of the obtained results. This study does not attempt to substitute a new method of evaluation for those used currently. Rather, it focuses on an important sector of the Argentine economy, agriculture, to answer the research question, "Will improvements in highways substantial- ly increase agricultural production?" Decisions as to whether road construction should be undertaken are not made, but they can follow from this type of study if agricultural production is considered sufficiently important to the economy. Fred D. Miller The problem was studied in southern Argentina in the semi-arid area bordering National Highway 35 between Bahia Blanca in the province of Buenos Aires and Santa Rosa, capital of the province of La Pampa. The conclusions were based on background material from sources in Buenos Aires and Bahia Blanca and personally collected field data from farms in the region. A particular government unit was selected for spe- cific concentration following an examination of the geographic conditions and historical events of the region as they affect the agricultural and transportation sectors. The partido (county) Puan was chosen because it contained an unpaved section of Route 35 and has representative characteristics which allow conclusions to be generalized to the region. Systematic personal contact with the producers was made possi- ble by the focus of interest on a smaller area. The partido was divided into sixty-eight divisions from each of which a farmer was chosen for an interview. A questionnaire furnished information about farm methods and aspirations as well as about expectations of production changes made possible by road improvements. _Another questionnaire delivered to the principal marketing organizations of the partido yielded data about marketing and transportation and the types of changes in them which are possible. With a knowledge of the farmers' Fred D. Miller attitudes and techniques and of the probable savings in marketing and transport costs, it was possible to estimate the prospective gains from road improvements. These results were then generalized to the entire Bahia Blanca-Santa Rosa region to the extent that they were applicable. It was found that the producers do not expect signifi— cant economic gains to arise from road improvements. Also, there were doubts that those benefits that do accrue from road improvements will result in greater agricultural pro- duction. In an area that is served by railroads and a system of Esecondary" dirt roads the contribution of added trans- port facilities is smaller than would be the case in an area which has a marked shortage of facilities. The cost re— ductions arising from road improvements are not a large per— centage of total costs and institutional factors prevent all of them from being passed to prOducers. Even when producers receive the benefits from cost reductions, production in- creases are limited by an apparent inertia on the parts of producers which makes them slow to take advantage of improved conditions and by the physiography of the region. Because of the region's particular characteristics it is difficult to make far-reaching statements which are appli- cable to other parts of the country or the world. It is sug- gested, however, that more specific studies be made since Fred D. Miller many are, at present, generalized to wider areas. If more detailed investigations were undertaken this perhaps would not be the case and roads would be viewed more realistically. THE EFFECTS OF HIGHWAY IMPROVEMENTS ON AGRICULTURAL PRODUCTION: AN ARGENTINE CASE STUDY BY ’7 ‘1 , -‘/. fFred D. Miller f{" f‘fi LC, ‘3‘\ A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Economics 1967 f‘ .fi’.o‘.f ~ N39133:; ACKNOWLEDGMENTS I appreciate the help of Professors Byron Brown and Garland Wbod who read and offered comments on this disser- tation. A special thank you is due Professor John M. Hunter for his suggestion of the idea, assistance in formulating the proposal and continued generous help in completing the research and writing. ii TABLE OF CONTENTS Page ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . ii LIST OF TABLES . . . . . . . . . . . . . . . . . . . . iv LIST OF GRAPHS . . . . . . . . . . . . . . . . . . . . vi LIST OF MAPS . . . . . . . . . . . . . . . . . . . . . vii LIST OF APPENDICES . . . . . . . . . . . . . . . . . . viii Chapter I. INTRODUCTION . . . . . . . . . . . . . . . . . 1 II. GEOGRAPHICAL AND HISTORICAL ENVIRONMENTS . . . 27 III. AGRICULTURE IN PUAN . . . . . . . . . . . . . 71 IV. TRANSPORTATION IN PUAN . . . . . . J . . . . . 101 v. INTERVIEWS IN PUAN . . . . . . . . . . . . . . 130 VI. BAHIA BLANCArSANTA ROSA REGION . . . . . . . . 173 VII. CONCLUSIONS . . . . . . . . . . . . . . . . . 185 APPENDICES . . . . . . . . . . . . . . . . . . . . . . 197 BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . . . 203 iii Table 10. 11. LIST OF TABLES Distribution of farms by size in southwest Buenos Aires Province, 1958 . . . . . Distribution of farms by size in the partido Puan, 1960 . . . . . . . . . . . . . . . Cost of production in 1966 pesos for a hec- tare of wheat in Bordenave Transportation costs as percentages of sales prices for cattle sent from Darragueira to Bahia Blanca . . . . . . . . . . . Transportation costs as percentages of sales prices for sheep and wool . . . . . . . . Reductions in transportation costs between Darragueira and Bahia Blanca as a result of the improvement of provincial roads and Route 35 . . . . . . . . . . . Distribution of farms and producers in the sample and population in Puan Size of farms and type of land holding in sample drawn from the partido Puan Distances of farms from a paved highway, a railroad station, and Bahia Blanca in sample drawn from the partido Puan . . Could you sell more of what you produce with all-weather roads? . . . . . . . . . . . Could you produce more with all-weather roads? . . . . . . . . . . . . . . . . . . iv Page 45 77 117 119 120 125 141 143 145 147 150 Table Page 12. Could you reduce your transportation costs with all-weather roads? 154 13. (a) WOuld you change your methods if more highways were improved? (b) WOuld there be more changes in more time? 157 LIST OF GRAPHS Graph 1. Yearly rainfall in Bordenave between 1947 and 1966 2. Monthly high, low, and average rainfall in Bordenave between 1947 and 1966 3. Number of days with rainfall of ten, twenty, and thirty millimeters in Bordenave be- tween 1947 and 1966 vi Page 86 87 106 Map LIST OF MAPS Transportation networks and political di- visions in the Bahia Blanca-Santa Rosa region . . . . . . . . . . . . . . . Soil types in the Bahia Blanca-Santa Rosa region . . . . . . . . . . . . . . . Yearly rainfall in the Bahia Blanca-Santa Rosa region . . . . . . . . . . . . . Towns and tranSport networks in Puan Soils in Puan Sample selection from Puan Responses of farmers interviewed to the question, "What would you do differently if the 44 kilometers of Route 35 between _San German and La Pampa were paved?" Responses of farmers interviewed to the question, "What did you do differently after the section of Route 35 between San German and Nueva Roma was paved?" vii Page 29 3O 32 74 80 133 160 161 LIST OF APPENDICES Appendix Page I Questionnaire for agricultural COOpera- tives and "Casas de Commercio" . . . . . . 197 II Agricultural questionnaire for the partido Puan . . . . . . . . . . . . . . . . . . . 199 viii CHAPTER I INTRODUCTI ON Although the evaluation of highway construction pro- jects has a relatively short history, it is considerably longer than the economist's interest in the subject. This is particularly true in reference to less developed nations. Since the 1930's the more economically advanced countries have attempted sporadically to appraise the effects of roads and road improvements, usually within the engineer's frame of reference. Not until the 1950's did the literature re— flect much interest in transport evaluation problems in de- veloping regions, and this, also, was mostly by engineers. For various reasons, past results have satisfied few, in— cluding, and perhaps especially, economists. Recently, economics has attempted to contribute more to highway evalu- ation in less developed areas, but many of these efforts have been unsatisfactory as well, at least partially because of the approaches utilized. This economic feasibility study of a highway in a less developed nation, Argentina, employs a method of evaluation different from those used previously. For a number of reasons such as the shortages of capital, techniques, awareness, desires, or other necessary elements, the building of roads generally has been spasmodic. In many cases when roads were built the needs were apparent and the results favorable. According to Hans Adler, "some of the most obvious investments can be made simply by look- ing at a map and at the location of major industries and population centers. But this is not true after the most ob- vious highways have been constructed, nor does such a simple approach permit an adequate judgement about priorities over time, among the modes of transport, or between transport and investments in other fields."1 Undoubtedly some of the most economic construction sites have been ignored. Even when the best location was chosen there was little concern that the quality of the road was the most suitable. The benefits arising from road cOnstruction, however, did not lead people to ask the question, "Wbuld the benefits have been greater with a different use of funds?" The failure to investigate the effect of highways more thoroughly stems, in part, from the difficulty in deciding how many of the changes which oc- cur after a road is constructed can be attributed to it. Un— til the last few years there has been little emphasis or interest in choosing between location and quality alternatives in a systematic manner. Thus, roads have been discussed in l"Economic Evaluation of Transport Projects," chapter 9 in Transport Investments_and Economic Development, ed. Gary Fromm (Washington, D.C.: The Brookings Institution, 1965), p. 171. terms of customary construction methods, engineers' physical dimensions, and financial costs. NOw that many of the visibly useful roads have been built, a greater need exists for developing more sophisticated project evaluation techniques. This is true not only for constructing new highways, but for improving existing roads as well. The deterioration of roads resulting from increased traffic has created pressure to seek more money and machinery for road construction. Assistance has been sought from such agencies as the United States Aid for International Develop- ment (A.I.D.) and the International Bank for Reconstruction and Development (I.B.R.D.) which require project proposals from prospective recipient nations, and, consequently, road evaluations have been encouraged. The appraisals have been made primarily by engineers who have given little attention to the economic problems involved. An awareness of this limitation was acknowledged by A.I.D. when a grant was made to The Brookings Institution for the study and improvement of existing methods of evaluation. Although a number of con- structive suggestions have arisen from the research of The Brookings Institution, they have not yet been widely applied and some deficiencies persist. Given the early lack of interest in the evaluation of highway construction projects, the primordial position of engineers, the belated, but increasing, enthusiasm of econo- mists and the presence of international agencies in the matter, it is no wonder that a number of approaches and methodologies have been developed. It is important to ex- amine the history of these so that our study can be seen in proper perspective. Common methods.-—The currently applied highway evalu- ation methods have evolved from engineering project analyses. Engineering studies have existed on a number of levels of complexity. The simplest criterion of "minimizing construction costs," was first used and is still employed. It requires no more than a passing look at what the economic benefits and costs might be. More common, however, is the study which computes benefits which accrue to road users in terms of such elements as savings in driving time, fewer accidents, and lower vehicle maintenance expenditures, and weighs these against the costs of construction, maintenance, and adminis- tration of the highway. Both benefits and costs are ex- pressed in discounted present value terms so that the esti- mated opportunity cost of capital, and variable benefits and costs over time are considered. These data provide a cal- culable benefit-cost ratio or internal rate of return on investment. With them it is decided which of three or four roads--suggested on the basis of suspected locational ad- vantages in construction or use--should be constructed. This benefit-cost method requires only a list of the benefits which accrue to actual users of the highway and ig- nores those received by persons who do not personally use the road. Also, it can obscure the real issue of whether'ggy road should be constructed, since even with a benefit-cost ratio of greater than one an alternative investment might be more profitable for the economy. In an economically advanced nation it is possible to compile an adequate list of techni- cal statistics, as has been done in the United States by the American Association of State Highway Officials, and make reasonably accurate predictions of human reactions to a new or improved highway.2 Hence, within the confines of the method a satisfactory job can be done. However, the lack of statistics and greater uncertainty in human reactions in less developed nations often lead to inaccurate results on which to base decisions, even within this limited scope. A realization of the restricted range in the calcu- lation of benefits and costs prompted the estimation of the effect of highways on national income. This is an extension of engineering data by the economist on a macro-economic level. With this method, figures are assigned not only to benefits derived by the actual users of the road, but to quantifiable economic benefits accruing to the community as well. Often these calculations are capable of showing im- pressive favorable comparisons between total benefits and the costs of highway construction, maintenance and 2Road User Benefit Analysis for Highway_;mprovements. A Report by the Committee on Planning and Design Policies, American Association of State Highway Officials (washington, D.C.: American Association of State Highway Officials, 1960). administration. It is usually added that benefits will be even greater in terms of non-measurable social gains such as improved education, safety, and communication. Surely, a great many benefits do arise from road construction, but this approach, unfortunately, has produced a one—sided con- sideration of their magnitude in relation to costs. Par- ticularly, little attention has been directed to losses in national income due to road construction. Such matters as encouragement of industries which damage existing industries are not acknowledged. Also, there are always non-measurable social losses when social change occurs and old habits and attitudes are upset, but these are not recognized. If in- creases in national income and social benefits arising from highway construction are included in calculations decreases in income and social losses also should be considered. Even if the problem of unequal weighting of benefits and costs is overcome there remain immense measurement problems. _With the poor statistics available in most less develOped countries, the only factors which can be measured reasonably accurately are the construction and maintenance costs of the highway. These costs are also difficult to estimate over a period of time, especially in an atmosphere of government instability, inflation, and periodic resource shortages. When estimates are made in terms of national aggregates (often the only data available), the crucial micro- socio—economic factors can easily be overlooked. In any case, the predicted magnitude of gains and losses is con— tingent upon people acting according to particular assump- tions. Certainly, the conclusions are unreliable if these assumptions are inaccurate or do not fit reality, as often is the case with assumptions about groups of people. Recent improvements in method.--Whi1e the entrance of economists into the field of road project analysis has expanded the engineer's frame of reference, there is still much room for improvement. Two products of The Transport Re- search Program of the Brookings Institution are especially helpful in bettering project analyses. In one, Clell Harral outlines steps to use in evaluating all road projects, empha- sizing that the evaluator should bear in mind the accuracy of his figures in quantifying variables and his facts in enumerating benefits and costs.3 He consolidates past streams of thought and places them in a setting of concern for interrelated sectors--both steps are helpful in achieving more realism. In the other, George Wilson asserts that there should be an awareness of complementary relationships between transportation and these sectors and stresses that human re- actions should be examined rather than merely stated as as- sumptions.4 He writes that "NOneconomic, or institutional, 3Preparation and_Apprai§§l of Transport Project. A Report for the Transport Research Program (Washington, D.C.: The Brookings Institution, 1965). 4TheJImpact of Highway Investment onigevelopment (Washington, D.C.: The Brookings Institution, 1965). factors-~often assumed away-~make the impact of improved transportation uncertain."5 It is also suggested that If economic growth is really a question of people, then the aggregative, national income approach might miss the essence of the process of development. Tying the analysis to specific industries and regions shpuld permit a closer contact with individual re- sponse mechanisms, which is essential to a fuller comprehension of economic growth. Both of these studies acknowledge the difficulty in finding accurate data and the pitfall in making over—simplified as- sumptions about the human element involved. Wilson, par- ticularly, suggests more regional studies to gain an under— standing of the micro-economics in project evaluation as*a step in explaining the aggregates of the macro-approach. In summary, the history of highway project evalu- ations has produced various approaches to the problem with occasional dominance of both engineers and economists as evaluators. Inadequacies in common methods and in their application more recently have led to steps toward an ap- proach to economic evaluation on a micro level. Controver- sies_have arisen as to the positions of the engineer and the economist, the measurement and relative inportance of in- tangible benefits and costs, the use of statistics, and whether studies should be made on a national or regional level. Representatives of all basic methods, with their SIbid., p. 11. 6Ibid., p. 170. aberrations, are still in use with the oldest, that of the engineers, most widespread. Argentine efforts.-—Highway project evaluations in Argentina reflect the diversity of approaches and include in- frequent applications of the newer methods. The early history of road building in Argentina consisted primarily of connecting agricultural areas to railroad stations or to Buenos Aires. As there was little or no controversy over the feasibility of this plan or the points between which a road should be built, road planning and building were entirely engineering problems. When reactions arose against the centralization in Buenos Aires, more emphasis was given to building roads in the directions of the ports of Bahia Blanca or Rosario or to the railroads leading to these cities. Still, these were projects for engineers. Economic studies received first expression in terms 01? national benefits to be gained from specific road projects. TTLis entailed little more than quantifying the type of bene- fJitwhich the engineers acknowledged verbally and suggesting a ifew more indirect benefits. The economic factor also has beiean discussed in terms of the effects of transportation on SI>€BCifiC industries. In some of these, road transportation 153 considered to be a significant element. In this category beBlong two studies relating agriculture to transport.7 They \ 7Agri-Research Inc., "Adjusting Grain Marketing Fa- Cilities and Practices in Argentina to Meet Projected Re- quirements," A study by an A.I.D. mission to Argentina 10 contain sections referring to the relationships between transportation and grain in one case, and transportation and cattle in the other. Both consider roads to be relatively important, but discuss them only in general terms with recom- mendations that they should be improved. Studies directly related to the topic of highway investment and its effect on agriculture do not exist, as the economic approach has not yet been specifically applied. In 1962, a thorough study of Argentine transport media was completed.8 It dealt with the history and nature of all branches of transportation and their effects on other economic sectors on a national level. Engineering and macro— economic concepts were used. A complete description of the highway system of that time was given, as well as plans for future construction. However, little has been done with this study since then, and it remains useful only as.a description of conditions existing at the time of writing. There are few, if any, Argentine studies using an eco- nomic approach for evaluating road construction projects. The National Highway Administration (Vialidad Nacional) de- cided to build the highway with which this study is concerned (Buenos Aires, 1962). Charles V. Wboten, and James R. Snitzler, "The Domestic Transportation Requirement of the Argentine Cattle Industry." A Report Presented to C.A.F.A. D.E; by a U.S. A.I.D. mission (Buenos Aires, 1961)— 8Transportes Argentinos Plan de Largo Alcance (Buenos Aires: Ministerio de Obras y Servicios Pfiblicos, 1962). 11 on the basis of engineering criteria. The economic sections of the several reports concerning the project included only the following reasons as economic justification for con— struction: (l) The road is in an important zone. (2) Goods take this route to the port. (3) It is impassable when rainy and dust obscures visibility in dry periods. (4) It is in- adequate for the volume of trucks, and (5) It causes truck loads to be reduced.9 Conceivably, highway construction could be justified with these factors, but it certainly can- not be inferred from a mere statement of the problems. The most recent highway study in Argentina concerns the province of Corrientes.10 The section that is devoted to economics is an extension of engineering data and quanti- fied assumptions about future possibilities. It is placed in the mainstream of macro—economic studies when it concludes that "The areas sown to principal crops will expand by an average of 143 per cent" over a twenty-year period.ll 9In the Reports on National Route 35. Cédigo de Tra- mos de la Vialidad Naeional_ge Caminos, Vialidad Nacional (Buenos Aires). A number of large notebooks concerning Route 35 contained only one-half page discussing economic factors, with the rest devoted to engineering relationships and costs of construction. logeasibility Study Highway Plan, Province of Cor- rientes, Argentina. A Report Prepared by Brown and Root Overseas, Inc. (Buenos Aires: Consejo Federal de Inversiones, 1966). Ibid., p. 85. 12 A micro approach.--While highway evaluations by Argentines for domestic projects have been predominantly engineering studies, many of the recent projects carried out under the auspices of international organizations have com- bined an economic emphasis with an engineering approach. In either case conceptual problems remain since a benefit-cost ratio, at best, can be used effectively only to decide the best project from an economic efficiency point of view.12 Certainly, extra-economic considerations are important to national planners in deciding whether a project is feasible. This study does not attempt to correct the deficiencies of benefit-cost methods, but, rather, to accentuate the focus on the economic effects which can be expected from highway improvements. It employs a micro-economic method which differs from what has been tried in other.countries and from what has been done in Argentina. Rather than deal with the entire array of benefits and costs, it is concerned with the direct relationship between highway improvements and agri- cultural production. The area Of concentration is narrowed so that the dubious imputations to intangible benefits and costs is avoided. National data are used sparingly since Argentina fits Wilfred Owen‘s description of less developed countries in general in that "Naither national production 12See Arthur Maass, "Benefit-Cost Analysis: Its Rele- vance to Public Investment Decisions,"_guarterly Journal of Economics, XXXX (May, 1966), pp. 208—226. 13 statistics nor data on past and present freight movements are complete and reliable, and they seldom cover a sufficient period of time [for statistical analysis]."13 This study differs from past works in being regional in nature. It is based on information gained from persons in the agriculture and transportation sectors rather than on inferences drawn from assumptions about them. It is believed, in accordance with Owen, that "To arrive at a specific physi- cal requirement for transport . . . it is essential to depart from national aggregates and build estimates of traffic (and) . . . physical needs . . . from the ground up."14 By work- ing on a micro level, it is possible to compile statistics personally and to know the limit of their accuracy. The conclusions reached will not permit a final con- struction decision in that the totality of benefits will not have been considered, but the most important element from the standpoint of project feasibility will have been emphasized. This does not deny the existence of indirect and noneconomic benefits or deny their importance. It is believed, however, that the direct relationships are obscured when these less tangible factors are included and that if a definite influence of highway improvements on agricultural production can be shown, stronger statements can be made. The indirect or 13$trate for MObilit (Washington: The Brookings Institute, 1964), p. 49. 14Ibid0) po 52. l4 unquantifiable benefits and costs can be weighed with greater understanding following such a study, since there will be an awareness of receptivity to new ideas and of pro- pensities to change, but these subjective aspects of the evaluation will not be undertaken here. Theoretical expectations.-—It is useful to explore the implications of value theory for our problem before any empirical analysis is undertaken. The research question is “WOuld the improvement of roads lead to a substantial in crease in agricultural production?" The position of road transportation in the agricultural marketing process must be established if this question is to be answered. If the pro— duction functions of the principal agricultural products are set forth, the various ways in which road transport affects these products can be ascertained. We can gain some insight by examining the production functions of two important products-—wheat and cattle. These products comprise the majority of the output of the area with which we shall be concerned and the other goods (mainly other grains and sheep) are produced from the same basic inputs. The quantity of wheat produced on the farm is de- termined by the following production function: 15 f (L,S,N,K,Ol,02) where quantity of wheat produced on the farm land seeds--including specific varieties and their preparation for planting fertilizer capital goods--including farm machinery and storage facilities personal labor and entrepreneurship hired labor The quantity of cattle produced on the farm is similarly expressed as: (2) ocf 1,A1) where fl (L1.P1.N1.Kl.oll.o2 quantity of cattle produced on the farm 1and--including natural pasture cultivated pasture—-including grains fertilizer capital goods--including equipment for culti- vated pasture and fencing for animals personal labor and entrepreneurship hired labor animals Both of the production functions are concerned with prOduction on the farm. A more important variable, however, 16 is the total product which reaches the market place. Road transport exerts its influence between the time when the products are harvested on the farm and their arrival at the point of sale. Consequently, the production functions will be expressed in terms of the quantities of the products marketed. The quantity of wheat marketed (me) depends on the transportation services (T) and the quantity of wheat pro- duced on the farm (wa) or (3) me = g (T: wa) Similarly, the quantity of cattle marketed (0cm) de- pends on transportation services (T1) and the quantity of cattle produced on the farm (ch) or (4)0 =g (T1 o ). cm ’ ’ cf In (3) and (4) the inputs in (l) and (2) can be substituted for (wa) and (ch) respectively. Equations (3) and (4) are written in this briefer form to emphasize transportation. The money prices of the goods after they are produced on the farm are important in determining the quantity to be marketed. These prices must be considered since they are de— termining factors in how much of (or whether) a product will be sent from farm to market. If the prices fall to a point Where an alternative use of the products would be more 17 profitable e.g., on—farm consumption of cattle or use of wheat for seed in the next year, the quantity transported could be lowered appreciably or even reduced to zero. The production functions are more informative if the transportation variable is divided into its particular com— ponents. When nothing more than the variables (T) or (T1) is examined there is no distinction between road and railway transport. In this case goods can be sent by any transport media and road improvements need not affect the transport variables if they do not result in a change which makes haul- ing by truck more attractive than shipping by train. It is helpful to introduce two variables to make the distinction clearer. The variable (Tr) will be used to represent road transport and (Tt) will signify transportation by train. With this difference one of the variables can take a coef— ficient of zero or the two means of transport can share the shipments depending on the prices of their services and the nature of the goods. Price, of course, includes not only freight rates, but losses due to delays, breakage, strikes, theft, and other factors. Another transportation variable is also necessary. This, (Tf), is to represent the shipments by truck over "feeder roads" from farms to towns. The variables (Tr) and (Tt) represent shipments from towns to market places. The products must first reach the towns by "feeder roads" before 18 they are carried over main provincial roads and national highways to marketing centers. The production functions for the quantities of cattle and wheat marketed can now be expressed as (5) Q... (6) ocm h (wa, Tr,Tt,Tf) and l l i 1 Production functions of this form can be used to show how transportation influences the marketer and how road im- provements can affect agricultural production. Essentially, all changes in the use of transportation arise from a lower price for transport services. The effects, however, are con- veyed in several different ways. First, road improvements mean a greater supply of transportation and a consequent lower price for transpor- tation services. we can expect that some farmers will change the quantity of transportation services consumed because of the lower price. All or none of the goods could be changed from rails to roads, depending on the relative prices of the services and substitution possibilities. The improvement of a main highway would have an effect on the movement of goods between the town and market if the price of road transport were lowered and more were utilized. A change in the quantity of goods marketed would be expected since the payments for transportation would be reduced. This can be Viewed as a direct and immediate increase in total product (me or Qcm)' 19 Transport can also affect production by facilitating farm to town shipments. This would require improvements of "feeder roads." It would be expected, to the extent that producers use the "feeder roads,“ that total product would increase immediately. In both this and the previous case gains in production result from reductions in transportation costs even if nothing more is produced or sent to market. Second, total product can be increased by removing obstacles to marketing wheat and cattle produced on the farm. If production is limited by trucking facilities which cause delays and losses e.g., extra storage charges for wheat and weight losses in cattle, road improvements could remove the problem and enable more products to reach the market. Hence, once again, gains could arise with no more production on the farm. These effects most likely would be shown in changes in (Tf) since obstacles to tranSporting goods are usually present primarily with "feeder roads." Third, a less immediate, but probably greater, in— crease in production arises from the use of resources re- leased by transport savings. A new combination of inputs could lead to a greater quantity of output (wa or Ccf)' This could be realized through lower marginal costs which would allow the utilization of new inputs or by a re- combination of already used inputs in a more productive manner . 20 These effects are somewhat different in nature i.e., (l) lowering the price of existing transport where goods would reach the market anyway, (2) removing obstacles and re- ducing losses to produced goods, and (3) allowing a new combination of inputs to increase production on the farm. They each can be reduced to the same concept, however, which is lowering the price of transportation to the producers. It is always possible to haul goods if a high enough price is paid--even if someone must go to the extreme of drying a muddy road artificially or bulldozing tracks in front of a truck. These methods are not followed only because their costs are too high. In every case in which roads are im- proved the supply of transportation is increased and the prices of transport services are expected to fall. Immediate gains are received from the price reductions. Depending on how the released resources are used, production can be in- creased even more with a new input-mix. This result can be elaborated in terms of the model. It is known that the marginal products per dollar of all in— puts, are equal if we assume that inputs are used in their least cost combinations. When the price of any input is re- duced, more of it will be applied and a greater use of all other inputs will result, provided that there is a degree of complementarity between them. The above point can be clarified by the use of iso- quants. Using the inputs from (5) we can express (Q .) as l 21 being determined by (wa ) and either (Tr), (Tt), or (Tf). l (T will be used in our analysis.) wa Qsz wal me2 T1 T2 I1 12 T (Q ) is an isoquant expressing a specified level 1 of production with various combinations of inputs utilized per unit of time. ~Production initially will take place at a point such as (Qw ). If transportation becomes cheaper fl’ Tl' . . I A . I as a result of road improvements, more transport services will be utilized and the new isocost line will be (12). A higher level of production (Q ) will be attained and, if 2 the inputs are complementary, more of both inputs will be used. The new production point will be (wa , T2). If the 2 inputs are not complementary then there is no reason to as- sume that (Qw ) will increase. Also, if more (wa) obtains there, is no guarantee that it will be used to increase 22 (me). In agriculture, though, complementarity in inputs is a reasonable assumption and the first reservation is not a strong one. Second, it is assumed that an optimum amount of wheat is being held at the point (wa , T1)' If more is pro- 1 duced on the farm it is expected that more will be shipped to market. Hence, if we assume that (wa) will increase we can expect that (me) will be greater as well. Once again, in terms of the production function for wheat, if the quantity of wheat marketed depends on the quantities of inputs (5) me = h (wa, Tr,Tt,Tf) then. the total cost of production is a function of the quantity of wheat marketed and the prices of the inputs (7) TC = ( J P .9 P .9 P 2 P ) wm me tr tf tp wa Assuming that firms (farmers) are perfect competitors, a fall in any input price will lead to a fall in the marginal cost of the product, a greater utilization of inputs and increased production. Consequently, the industry output will increase and as the supply curve shifts down, the industry price will fall. The lower price for the industry will cause a re- duction in output by at least some firms and partially off- set the increase in production. 23 In summary, it is asked if the improvement of roads will lead to an increase in agricultural production. On the basis of value theory it is suggested that road improvement projects will, in fact, lead to production increases. With the production functions for both wheat and cattle marketed it has been shown both verbally and graphically that a re- duction in price of one of the inputs, transport, will cause more of all inputs to be used and production to be increased. The magnitude of the increase will depend on the reduction in costs which road improvements allow, the way in which in— puts are recombined and the elasticity of the industry de- mand curve. Consequently, these latter factors i.e., cost reductions, recombination of inputs, and the nature of the agricultural market must be empirically explored to see if the conclusions suggested by the theoretical analysis will hold. The possibilities of the theoretical expectations ma- terializing depend on a number of factors within the economy. The conceivable limitations imposed by institutional factors must be examined if the increases in production are to be estimated accurately. With the theoretical basis outlined above we will now determine empirically how an autonomous im— provement in roads can be expected to affect agricultural production. Organization of the study.-—The area of interest is the semi-arid region surrounding National Highway 35, between 24 the cities of Bahia Blanca, in the province of Buenos Aires, and Santa Rosa, the capital of the province of La Pampa. This is an agricultural zone which produces primarily cattle, sheep, and small grains, of which the majority is shipped to the port of Bahia Blanca. While the area is generally fertile, the increase in production has been about equal to the national average which, according to the Ministry of Agriculture statistics, has increased only .5 per cent per year between the periods 1935-39 and 1960-63.15 Many of the people living in the zone feel that paving Route 35 is es— sential for economic progress. There exists a faith that a highway will act as a catalyst for economic development. While new road con- struction has sometimes possessed this catalytic quality, it is by no means certain that this faith is justified in the case of highway improvements. In ascertaining to what extent this feeling is justified, we concentrate on the section of the highway which is not yet paved so that comparisons can be made between it and a section which was paved in recent years. It will be hypothesized that production can be in— creased substantially by paving the highway. The hypothesis will be accepted or rejected on the basis of the framework suggested above and to be elaborated in the chapters to follow. 15La Neuva Provincia (Bahia Blanca), October 12, 1966, 25 Chapter II begins the development of the topic by de- fining the limits within which a change in transportation can effect agriculture. The geographical characteristics of the region are described so as to delineate the natural bounds within which the agrarian sector must operate. The histories of population movements, transportation, and agri- culture are traced briefly for the nation, with particular reference to the Bahia Blanca-Santa Rosa region, so that their bearing on the present production climate can be understood. In Chapter III attention is focused on a specific area within the region, the partido (county) Puan, where the unpaved section of Route 35 exists. The farmers, their methods, and their readiness to change was examined to en- able prediction of the ways that they would react to a change in the transport input. In Chapter IV the concentration on the partido Puan continues, but emphasis is shifted to the highway and rail— road systems. Their structure and its particular relation to agriculture iS»analyzed so that it can be shown how a change in transportation affects agricultural production. Chapter V recounts the thoughts of producers concern- ing road improvements and their opinions on how these im- provements will affect their production. It is based on interviews with persons active in the agricultural sector within Puan. 26 In Chapter VI particular findings in Puan are ap- plied to the area in general, and any factors which might have made them different from those that would have resulted with other methods of examination are decreased. Finally in Chapter VII we discuss the degree of con- fidence which can be placed in our conclusions about the ef- fects of highway improvements on agricultural production. Suggestions are made for future studies. CHAPTER II GEOGRAPHICAL AND HISTORICAL ENVIRONMENTS Highway improvements and agricultural production have relevance to specific geographic and historical environ- ments. One of the problems with many highway project analyses is the encompassing assumptions made about peOples of diverse areas without considering their environments. To avoid this, and because it is believed that one cannot accurately pre- dict changes resulting from highway improvements without understanding the framework within which they take place, the geographic conditions and historical events which have formed and are forming the "zone of influence" of Route 35 in the Bahia Blanca-Santa Rosa region will be discussed. More spe- Cifically, the soil and rainfall characteristics will be de- scribed as they relate to the agricultural and transportation sectors. The histories of national migrations, transpor- tation, and agriculture will be traced within the context of the physiography and with special attention to the Bahia Blanca—Santa Rosa region when it differs from the more gener- a1 pattern. The "zone of influence" of Route 35 extends from the port of Bahia Blanca in western, west-northwestern, and 27 28 west-southwestern directions. Its limits are marked by the National Highways 33 to the north and 22 to the south, the unproductive portions of the province of La Pampa to the west and, in some cases, the dominance of the City of Buenos Aires (see Map 1). While there is traffic from as far away as the provinces of Rio Negro, Mendoza, San Luis and Cordoba,~it is sparse and very rarely includes agricultural goods. The highway is most important to people in the area between Santa Rosa and Bahia Blanca. This covers the southwest of the province of Buenos Aires and eastern La Pampa. The area is characterized by more diversified clima- tic conditions and topography than is present in the flatter, more temperate pampas to the north. From Sierra de la Ventana, a small range of mountains rising to an altitude of about 3,700 feet the LiThosols (mountain soils) near Pique in the eastern portion (of Map 2), the land levels to the south and west-~broken only by occasional areas of gently rolling hills and saline depressions. The greater part of the region is flat or slightly undulating pasture land with a smaller PrOportion used for the cultivation of small grains.1 A rather abrupt change in the relatively homogeneous grass- lands is found after passing an arc drawn from slightly be— low Bahia Blanca to just west of Santa Rosa. This arc de- lineates what is known as the "fertile crescent," to the k 1About 60 per cent of the productive land is used for cattle, 20 per cent for crops, 15 per cent for sheep, and 5 per cent for various other products. 29 MAP I Transportation Networks and Political Divisions in the Bahia Blanca — Santa Rosa Region ! camu '. AMA . ROSIA =3 i / cm. i AcuA ; - 1‘ : o l :;\_G "uni .- Q a) U mmcom I ! cucumo-ca .. . Mi. O Capitals ill Raflroads National Highways Provlnicial Roads Partldo Boundary o Provinicial Boundary .a" .% as), J" TORNOUIST BANIA OLA CA '. \ . °o V 30 MAP 2 lioilliin n n “HM... ..-..i--i. -...l m u u u u a . 0.---..UOICO... I u ''''' C'II -‘I.---l AI... . .I.lill'lv---l- . iiiiH ................... . 0—-- as. -- --~-“f production, and the necessity and feasibility of con- Structing paved roads. While those limits on agricultural production which are set by the components and moisture content of the soil can always be altered by the discoveries of subterranean water, the use of methods to preserve soil humidity and 32 MAP 3 Yearly Rainfall in the Bahia Blanca-Santa Rosa Region MACACNIN O (01 045i _ GR AL. ACHA @ ....... 5:2 J' ‘ gill; ,Mclté GE‘INQSCOQU' _ 3 d (NOMAD -CO e Capitals -------- Puan Boundary Provincial Boundary lsohyot (millimeters) II— Route 35 i:— 13 K: J“' 33 fertilizers, basic natural elements do not permit a large amount of profitable manipulation. In general, the loose, wind-blown soils of the area are dry with little organic con- tent and, consequently, susceptible to both wind and water erosion. It is seldom profitable to improve the soils with fertilizers because of the variability both in frequency and volume of precipitation. Within this region, the relatively more abundant rainfalls in the Autumn and Spring provide the majority of the about 350 to 650 millimeter annual averages, but in these seasons, also, variations are considerable. In the northeastern area, with the most abundant moisture, it might be profitable to utilize fertilizers, but even here, yearly rainfall varies from less than 300 to over 900 milli— meters.2 Furthermore, the rate of evaporation is about 800 to 850 millimeters per year and, hence, only in the wettest years is the moisture maintained by the soils.3 There can be little flexibility in production until methods are found to extend the zone's physical capacities. The variety of soil types in the region permit a -number of levels of agricultural production. In the rich Pasture lands of the northeast, cattle and grain production 2In the southern portion of the region the "coef- ficient of variation" or precipitation in the year of most rainfall divided by precipitation in the year of least rain- fall, is greater than four, the highest classification in the country. Mast of the region is between three and four, Which is still relatively high. 3Francisco de Aparicio, and Horecio A. Difrieri (di- rectors), La7Argentina, Suma de geografia (Buenos Aires: Ediciones Peuser, 1958), II, 121. n has 9.- '6- in! '1- I"! I g In" nu 34 are relatively greater and, when the rainfall is adequate, other products can be grown as well. The poorer soils of the south will sometimes not profitably support crops or animals. The majority of the soils are suitable for limited production of cereals and pastures with sizeable crops ac- companying well-distributed precipitation. There is some variation in that oats are more easily grown in the Chestnut and brunizen (brown-black) soils of the middle and northern sections of the region while rye is a more popular crop in the less fertile western pastures. Wheat and hay barley are harvested in almost any area that will support a crop, with wheat being the hardier of the two. Some areas of the south and west which contain sandy and semi-desertic soils with little organic matter are not capable of producing cereals and are used only for cattle. Generally, the unimproved soils make difficult the introduction of new types of crops or animals so that the decision to be made is between types and quantities of grains, cattle, and sheep. For several reasons the soil—climate combination is cOmducive to "mixed farms," i.e., farms with both crOps and livestock. Where it is possible to plant grains, the un- certainty concerning rainfall leads the majority of farmers to raise cattle as insurance against a poor harvest. The fluctuating prices of cattle and sheep occasionally make ranching less profitable than crops. Livestock are raised, however, Since besides fulfilling the insurance functions, 35 they furnish a use for land which is held out of cultivation on alternate years, some fertilizer for the soil, and a source of food for on—farm consumption. If crops are not feasible, farmers produce cattle and sheep alone, but seldom is it the case that farms have crops without livestock. Above the arc of the "fertile crescent" the economic holding is considered to be a "mixed farm" of 300 to 350 hectares.4 Richer lands permit an average of one cow or four sheep per hectare. Below the arc, about 500 hectares are necessary because cereals often cannot be grown and pro— duction consists of large herds of cattle and sheep. As many as three hectares are needed per cow and a hectare cannot sup— port two sheep. Between these bounds, there are, of course, varying land capacities. While the limits can be altered, changes usually arise as a result of fluctuations in natural elements, e.g., more cattle per hectare are grazed in years of greater precipitation. A permanent extension of the fair— ly restrictive limits will surely require the application of new techniques. The transport of products is facilitated since roads are generally flat, wide, straight, and capable of supporting relatively large loads, but it is hindered by moisture in 4The term "economic holding" or "economic size farm" appears in the literature and is commonly used in the area. It apparently originated in a study which calculated the quantity of land necessary to permit a family to earn a "reasonable living. " 36 rainy periods and dust and wind in the summer. The lack of a road maintenance program adds to the difficulties. The greatest driving problems arise in the northeast where the fertile, brunizen soils become muddy and impassable, with, at times, only about thirty millimeters of rainfall, and in the south where the sandy areas are difficult to cross when there is a lack of moisture. The chestnut soils and pasture lands comprising the majority of the region are sometimes im- passable with about forty or fifty millimeters of rain, but many areas are still passable with this amount of precipi- tation because the layer of geese beneath the topsoil provides a hard base for traction.5 To the south and west, the soils combine a layer of.£Q§ge and a sandier topsoil to make them even less susceptible to rainfall problems. In almost every case, movement is possible along much of a road, but there are frequently several areas within each fifteen or twenty kilometers which easily become impassable. If these areas were eliminated or improved, the days in which transit is pre- vented could be reduced considerably. In the summer months, even in the more difficult areas, with a rainfall of about fifty millimeters, a loaded truck can pass by the middle of the next day and such a rain— fall does not occur every year. In winter, in the problem areas, transport is stopped for an average of about two weeks 5Tosca is hard clay. 37 per year by less rainfall than in the summer, since the higher humidity level preserves the moisture on the road. During winter months, transport is less important, however, as fewer products are marketed. It is fortunate that in zones where average precipitation is higher and dirt roads become more difficult to use, distances to be travelled are shorter. While there are problems with roads and many com- plaints about their restraints on mobility, it is question— able whether they act as significant limitations on agri- cultural production. It is the lack of comfort and the inconvenience and insecurity of not knowing if it will be possible to drive the following day, rather than the actual road conditions, which present the greatest problems. The area is appropriate for road construction since there are few natural barriers on the flat plains and, as has been mentioned, the soil, with its.gg§ge base, is capable of supporting heavy loads. The infrequent forested areas and saline depressions or lakes can easily be avoided and present minimal problems. Construction is further facilitated by the accessibility of materials. Gravel deposits and.tg§ge are common. The basic components of the highways constructed are two layers of_£g§ge covered by two layers of asphalt. The barriers to road construction are not geographical as these ingredients are readily available. The highways which are constructed are deteriorated rapidly by the natural ele— ments. This, though, is as much a problem with the quality 38 of the original pavement and the lack of a maintenance policy as with unfavorable climatic conditions. In summary, while there are physical limitations on both agriculture and transport, their effect is as much one of insecurity as of confining boundaries. There exist re— straints on the types of animals and crops which are adapt- able, but within these restraints the region is periodically capable of high production when agricultural methods are well-applied and precipitation is sufficient. In other years, when one of the frequent droughts lasts too long or many frosts occur, production is greatly reduced. The products of the region often are marketed with few diffi- culties, but, in other years, transportation is costly. The wrong combination of a good crop and poor roads leads to losses and this combination is practically always present for some producers. Highway construction could reduce both insecurity and transport costs immediately and perhaps have a greater effect, depending on both the extent to which the transport sector inhibits production and how ready the pro— ducers are to take advantage of better conditions. _ggpulation movements.-—P0pulation size and composition is crucial in the agricultural development of a nation. In the case of Argentina, immigrants, through their original im- pacts and, later, through internal population shifts, were instrumental in the molding of the farm structure. From 39 1830 to 1857, while Europeans were migrating to the United States, the doors were closed to immigration to Argentina and few changes took place within the country.6 However, in the period which followed, a number of economic opportunities arose and Argentina became a desirable destination for the European immigrant. By 1869, there were 210,000 foreign born; by 1895, 1,000,000; and by 1914 there were 2,400,000 within the country.7 Although there was some immigration following WOrld war I, the major population changes since that time have been internal shifts from farms to rural towns or from farms to cities. The early positions of the immi- grants and the domestic migration which followed have been responsible, to a large extent, for the distribution of farm holdings and farm population which now exists. The immigrants who arrived in Argentina were subject to varying, but usually well—intended public palicies, and a fairly consistent and less well-intended social re- ception. Mbst of the governments made token efforts to pre- vent the expansion of latifundias and to reach some sort of equal distribution of land.- However, large landholders pre— vailed and were successful in preserving their power. They 6Torcuato S. Di Tella, Gino Germani, Jorge Graciarena et al., Argentina, Sociedad de Masas (Buenos Aires: Edi- torial Universitaria de Buenos Aires, 1965), p. 28. 7Aldo Ferrer, and E. L. Wheelwright, "Industriali- zation in Argentina and Australia: A Comparative Study," Un- published working papers from Instituto Torcuato Di Tella, Sec. I, 8. 40 were aided in this goal by the sale of large portions of land by the government as an easy way to liquidate a debt. Also, the attempt at colonization, especially in the pro— vince of Buenos Aires, was enforced by a weak form of govern- mental control in the face of a strong desire by landholders to maintain their status. As a rule, the result of govern— ment policies, despite their announced intentions, was a more centralized pattern of land ownership. The people who travelled to Argentina had different characteristics than those who arrived in the United States. The immigration movement to NOrth America was comprised pre- dominantly of people from industrial, northern Europe. By the time that immigration was beginning to increase in Argen- tina, in the 1860's, many of the people were originating in southern Europe. They were immigrants with agricultural backgrounds who were accustomed, in general, to an absolutist system of government and to taking little part in decision- making. Often they had no interest in integrating with the Argentines and preferred to form colonies with their own kind. Even when immigrants desired to become a part of the Argentine society, the process was complicated. There was no provision for naturalization in the law of 1876, which was passed to facilitate immigration; and, also, the primary power group, the land owners, discouraged integration or par— ticipation in government. Consequently, there were forces 41 leading to the creation of small groups outside of society's mainstream who contributed their labor to the economy, but had little desire or opportunity to join the Argentines in other aspects of life. The main thrust of these factors led to many immigrants assuming insecure positions as land renters, agricultural workers, or laborers in industries as- sociated with agricultural processing.8 Without an established status and often with little trade experience outside of agriculture, the new arrivals had limited alternatives. Those who could afford to buy land could not do so in the best areas and those who sought to rent plots were offered only short-term contracts because of increasing land values. Agricultural and industrial laborers were free to search for the best jobs which were available, within the scope of their often modest capacities. The lack of secure positions caused the settlers to leave little that was permanent, such as schools and towns, which were the by-products of immigrants in other nations. With this organization of agriculture, it was relatively easy to shift workers to the city in Wbrld war I when the nation was forced, on a small scale, to begin the process of industrial— ization. However, the industrial base was not developed after the war and the migration to the cities was slowed until after the Depression of the 1930's prompted a more 8See Oscar E. Cornblit, Ezequiel Gallo (h ), and Alfredo A. O'Connell, "La Generacidn del 80 y sus Proyectos: Antecedentes y Consecuencias," Chapter 2 in Argentina, So- ciedad de Masas. 42 definite change in the social structure. During the De— pression reduced trade with other nations led to forced im— port substitution of some products, and fewer opportunities to sell agricultural goods. Many of the members of the labor force responded to the relative shortage of jobs on the farm by moving to the cities. Agricultural laborers, tenant farmers, and small landholders were, naturally, the first to leave. By the mid-1940's, when Peron assumed power and be- gan to encourage industrialization, many persons were still available to be shifted to the cities and to provide an urban labor force. An internal migration was stimulated by Peron's attempts to attract workers to industrial occupations, and, at the same time, the relative worsening of the agri- culturalist's position. This migration is still taking place although the "push" of poor farm conditions and "pull" of the city have less force than when they were purposely stimulated. A recent study lists the following reasons as important in causing members of the rural sector to move to more urban areas: (1) new techniques lead to fewer agricultural workers required; (2) an increase in contract as opposed to permanent workers: (3) the division of land among heirs results in plots which are too small; (4) the attraction of conveniences in the cities such as schools, water and electricity; 43 (5) an expansion of extensive cattle ranching, elimi- nating some farmers; (6) the droughts of 1949—50 and 1960—61 forcing some from the land; (7) the problem with erosion in semi-arid areas.9 To some extent, this migration has been from the countryside to rural towns, but because of the lack of conveniences in many towns, it is more often to larger cities. By 1963, the internal shifts had left only 19 per cent of the people on the land, well below the percentages in other Latin American nations.10 The most noticeable change in the agricultural structure in the zone of the pampas is the reduction in non— owner operated farms from 119,900 farms in 1947 to 50,200 in 11 About one-third of this decrease can be accounted 1960. for by an increase in land owners while the remainder can be explained by factors which have already been mentioned. The change to an ownership position has been motivated by such things as the utility of land as a hedge against inflation, the status accompanying landholding and a desire for tenants and sharecroppers to purchase the land on which they have worked for a number of years. 9Consejo Nacional de Desarrollo, Tenencia de la Tierra (Buenos Aires: Consejo Federal de Inversiones, 1964), Vol. 1, 2nd Part, 25-27. 10Ferrer, and Wheelwright, Op. cit., Sec. 3, 1. 11Plan Nacignal de Desarrollo 1965-1969 (Buenos Aires: Consejo Nacional de Desarrollo, 1965), p. 42. 44 The disparate assortment of farm Sizes and the un- systematic agrarian structure can be understood in View of the fact that the diverse forces which encourage both emigration from the rural areas and the purchase of land are operating on an originally very unequal distribution of land ownership and an unstable population. The range in sizes of farms in southwest Buenos Aires province is illustrative of the situ- ation (see Table 1). It shows at least 15 percent of the land in five categories of land holdings. When it is con— sidered that the "ideal" economic unit is in the 300-499 classification, it is seen that more than 80 per cent of the land is being exploited in a manner which is, in this sense, "uneconomic." Furthermore, if, as is widely believed, land owners, as opposed to renters, are the best developers of ‘the farms, since they are more likely to make long run in- ‘Iestments and give attention to soil management, the nearly equal distribution of owners on one hand and renters and sharecroppers on the other shows about one—half the farms and One-half the land being exploited in a less than "ideal" rIlanner.lz Transportation.--Transportation has always been easpecially important in Argentina because the major pro- cauction and consumption areas frequently are not the same. IBesides fulfilling the function of connecting domestic \ . . 12"Distribucién de la Propiedad Agraria en 1e Pro— ‘71ncia de Buenos Aires," Revista de Desarrolloigconomico, I (0ct.-Dec., 1958), p. 206. 45 production centers, roads and railways carry the produce from interior points to the coast, where agricultural pro— ducts historically have supplied, and still constitute, more than 90 per cent of the nation‘s exports. Geographically, there are no appreciable obstacles in the way of highway or railroad construction, but imposing problems remain in the transport sector. A brief look at Argentina's history helps to explain the reason for the poor transportation facilities which exist and their often uneconomic combination. Table 1. Distribution of farms by size in southwest Buenos Aires Province, 1958. Number Percentage Percentage Hectares of of Hectareage of Farms Farms Hectareage 10-49 3627 25.9 93,392 2.3 50-299 6430 46.0 902,344 22.1 300-499 1679 12.0 639,370 15.6 500-999 1284 9.2 861,095 21.1 1000—4999 862 ' 6.2 741,444 ' 18.1 5000 and over 107 1.0 848,741 20.8 \ £> Source: "Distribucidn de la Propiedad Agraria’en la r*3\rincia de Buenos Aires," Revista de Desarrollo Economico, (Oct.-Dec., 1958), p. 211. ‘1 -\ M 0: (I? 46 Argentina, unlike most nations, jumped from the ox— cart to the railroad age while spending little time in the The unimproved road network which the building of roads. nation possessed for decades was adequate, perhaps, for an isolated and unprogressive economy, but certainly was not capable of supporting the economic changes which transpired around the middle of the nineteenth century. Foreign in- Vestors, primarily from England and France, sought to trans- form the transportation structure by building railroads, in order to gain the benefits of the agricultural production po- tential in the internal regions. At first, from the initial investments in railroads in 1854, only a modest growth was seen and in 1871 there were still only 852 kilometers of trails. After this date, however, the increasing production arud willing buyers abroad combined to induce impressive in- CIVaases in rail construction so that a total of 12,475 kilo- meters had been laid by 1891, mostly within the fertile pro- vincae of Buenos.Aires.]'3 The growth continued as production was augmented and as agriculture was expanded to new areas. Railroads were improved at the expense of highway construction, and roads were relegated to the function of linking farming areas with railroad stations. As described by Scobie, The railroads were mere feelers which probed into the zones of cereal, cattle, and sheep to gather in \ S; 13Aparicio, and Difrieri,.gp;_gig., VII, 307. Torcuato ‘ JDi Tella, Gino Germani, Jorge Graciarena et al., Op. cit., p- 51. 91 M\~ I . \hb 47 freight for the ports. They fulfilled the immediate transport needs of the countryside and at the same time inhibited the construction of roads. The rail- roads did not want competition and so for decades the only roads permitted were the mud ruts radiating from the railroad station.. . . Roads remained as they had for three centuries--dusty shallow troughs or long canals, according to the season. ' In 1907, the shortage of roads was officially recognized by the Mitre Law which exempted railroads from taxes if they spent 3 per cent of their profits on roads approaching their stations.15 While the law did assist road construction, the emphasis was still on building roads leading to railways. As early as 1915, it was reported that the major obstacle to agricultural production was the lack of roads.16 The previous trend in transportation was changed in 11932. A law was passed which established the National High- way Administration, a system of taxes to raise revenue spe- cigfically for highways, and a long-range highway construction PrOgram. The law achieved a degree of success in that the "Nilueage of maintained national highways increased almost 170 per cent in the fifteen years following its ratification.17 , l4James Scobie, Revolution on the Pampas: A social -1¥L£i§orv_9f Argentine wheat 1860-1910 (Austin, Texas: The Uhlversity of Texas Press, 1964), p. 62. 1‘, 15Transportes Argentinos Plan de Lergo Alcance (Buenos lres; Ministerio de Obras y Servicios Publicos, 1962), App. III, p. 18. 16La Nacidn, January 29, 1915, p. 8. (3° l7Transportes Argentinos Plan de Largo Alcance,_gp, Q.) p. 19- 48 However, once roads were constructed with purposes other than serving railroads, the railroads began to feel the competition. This fact followed logically from character— istics of national develOpment. The early and continued emphasis on the external market rather than inter-provincial trade led to a series of towns housing railroad stations along lines to the ports. The marginal status of the immi- grant produced few desires to build towns in other places. Naturally, when roads were built, there were not many desti- nations other than these same towns and, consequently, they were usually constructed parallel to railways.18 The uneconomic duplication of transport facilities nuiich resulted was an important factor in the railroad de- cflline which began in 1932.19 The returns to railroads were reduced so that even fewer funds were available for improving Services and their competitive position worsened. The De- Pre ssion, and later the War, limited expenditures on rail- roads which might have countered the highway competition so that the capacity of freight cars could not support the de— "Nirld for shipments by railway. In some instances the increase \ 18See Map 1. This situation is illustrated today by the railways and national and major provincial roads in the region of influence of Route 35, which, in a number of cases, are parallel. When this is not the case usually the towns are not within the fertile crescent and were built after the 1'53 ilway boom . ( 19Alfonso Arnoldo, Geografia Econdmica Argentina I31.1.enos Aires: Editorial Kapelutz, 1963), p. 107. 49 in truck transport was forced as a means to handle goods for short and medium distances with security. Following the and the ensuing nationalization of the railroads in 1947, continual deficit, this tendency has been increased so that trucks were and are often called upon for hauls of longer distances which an efficient rail system could handle more economically. During the administration of Peron, from 1946 to Railroad services 1955, transport facilities deteriorated. continued to decline and the slack was not taken up by high- the new govern— way construction. After Peron's departure, ments made several attempts to increase expenditures on high- iuays and hoped to facilitate agricultural development in this nusnner. Despite their indications of administrative interest, liirtle was accomplished and the actual mileage of national 20 Even highways maintained in 1960 was lower than in 1948. Wirtll this reduction in road capacity on a national level, hj4311way transportation was increased because (1) more truckers Were using existing roads, (2) there was a very modest in- crease in provincial road construction and (3) probably most impOrtant, railroad services had "out-declined" any deterior- atlion which road transport services might have suffered. Be— then 1952 and 1963 rail tonnage hauled fell 50 per cent, a1— thOugh the number of ton-kilometers was reduced only 30 per 10c. 20Transportes Argentinos Plan de Largo Alcance, 50 cent, since railroads were still less expensive for longer distance deliveries.21 Recently, there has been a govern- mental recognition Of transportation problems in the form of studies and statements, but suggestions have often not been backed by money. When road construction or railroad improve- ments have taken place there has been little attention given to their coordination. Transportation in the area between Bahia Blanca and Santa Rosa is adequate in some respects, but, in general, re- flects the problems which are typical of the country. On the positive side, the road system has some relatively good dirt roads and also some recently paved highways which are in ex- iaellent condition. Also, in some parts the railroad service is: sufficient. On the other hand, many of the dirt roads are iJIadequate and the roads paved more than four or five years ago are in poor repair. All roads suffer from a very im— Perfect or non—existent maintenance policy, but this has not Yet taken its toll on the newly constructed highways. The rcDead network is complemented by two national railways, the RD<2a Railroad and the Sarmiento Railroad that, regardless of intentions, are not equipped to offer consistently satis- fa(:tory service. More than 87 per cent of the freight cars lir1 the Sarmiento Railroad are over forty years old and in the Race Railroad, the same percentage of cars is over thirty \ 21Plan Nacional de Desarrollo 1965-69, p. 68. 51 years old. In the Sarmiento Railroad 80 per cent and in the Roca Railroad 67 per cent of the cars are considered to be in "very bad" to "normal“ condition.22 Even in their poor state, however, railroads are the desired means of sending agricultural goods to Bahia Blanca because their rates are lower. But, the unavailability of railroad cars, periodically poor service and incidence of strikes has led many to uti- lize trucks instead. Most of the livestock and about one- half the grains that have reached Bahia Blanca since 1961 have been hauled by truck.23 Both systems of transportation have a great deal of room for improvement and the order in which they are improved will be influencial in the distri- knition of future freight movements. The implications for future policy are important. With a railway that is inadequate to satisfy the demand for its services and a trucking industry that is expanding more 1rapidly than the supply of highways, the transport admini- Stration should decide how transportation resources can be best allocated. Most changes are having the effect of in- c:3'~"~"-‘!asing the use of trucks beyond the present level which is already straining road capacity. Truckers now haul grain all year, rather than in the harvest season only, because of .__§___ 1; 22Plan de Desarrollo Econdmico-Social, Provincia de ji€§~l22fl2§ (Buenos Aires: Consejo Federal de Inversiones, 65), p0 700 23Agri-Research, Inc., Op. cit., p. 147. 52 the many granaries on individual farms and increased storage facilities in the towns and at the port. A proposed new un- loading facility at the port, to be made especially for trucks, Should enable the truckers to gain a larger share of the market. The over-used highways are being put in even worse condition as the trucking industry usurps freight which an efficient railroad could carry less expensively. Each change which aids road transport further injures the competitive position of the railroad. Railroads are still used because of the rate differential, but a recent rate in- crease has narrowed one of the railroad‘s only remaining ad- vantages. Ideally, rail service should be improved and a rmore equal allocation of freight shipments initiated, but tflnere is no indication that such a policy will be implemented. Ifluere are many possibilities for arriving at a more efficient .L‘lse of transport resources, but, because little is known as 'tC> what steps will be taken, it is impossible to predict the zOrle's future. Agricultural develOpment.-vThe development of the present conditions surrounding the production of cattle and <3IK>ps can be described more easily following the discussion (3f? population movements and the evolution of transportation. cattle ranching emerged from the decades of the 1850's and 1860's with a relative advantage over cultivation. With a st-J':onger historical base, the marketing of livestock received 53 the early benefits of technology. The British, with their capital and more advanced techniques, facilitated proper se- lection in cattle breeding and assisted in the shipment abroad of the finished product by investing in railroads, saladeros, and frigori’ficos.24 Foreign demand, especially British, provided a powerful incentive for livestock de- velopment and the fertile plains of the pampas were well- suited for the industry. Furthermore, the extensive nature of ranching was not inhibited by the early lack of roads and labor, since these shortages imposed no limitations on the grazing of vast herds of animals that could easily be driven on—the—hoof to railroad stations or marketing centers. Even be fore the force of the immigration wave was felt, cattle ranching had become a flourishing industry and as early as the period 1880-84 it was responsible for almost 90 per cent Of the nation's exports.25 The cultivation of crops, unlike cattle raising, re- quired-labor and more diversified transportation to reach large scale proportions. The planting of wheat, and other c1:330:38 to a lesser extent, was expanded when immigrants with agricultural interests entered the territory newly-opened by \ In . 24m are meat salting establishments which com- cerclally preserved the meat for long periods so that it 5,2216 be shipped to distant markets. Frigorificos are meat at ing houses which facilitated the shipment of refriger- e meats. 185 25Ricardo Ortiz, Historia Econdmico de la Argentina 0‘1930 (Buenos Aires: Editorial Raigal, 1955), I, 312. 'na .1 1]: 'I _a ‘1' f) 54 the railroads. However, in the 1860's and early 1870‘s crops were limited to farms alongside the railways and were not common. Scobie was perhaps, too strong in stating that Argentina “needed a major injection of European laborers if it was to be anything other than a land of scrawny cattle and sheep. The habits of three centuries were deeply em— bedded in an urban population that subsisted on commerce, politics, and on enormous herds exploited with a minimum of labor,“ but was essentially correct in suggesting that labor was needed for agricultural development.26 In 1872, there we re only 73,000 hectares of wheat, but as more immigrants came its adaptability was recognized and production stimu- 1a -I:ed.27 By 1878 more wheat was exported than imported and by 1891 there were 1,320,000 hectares of the grain under Cultivation.28 More advanced techniques were introduced Wi th the emphasis on the world market and other crops such as corn, barley, oats and rye were added. All of the requi— sites for a modern agriculture were laid by 1880 to 1900 ac- cOrding to Federico Daus, but there were some peculiarities within the farm structure which discouraged flexibility.29 \ 26Scobie, Op. cit., p. 30. p 81 27Di Tella, Germani, Graciarena et al., op cit., 28Ibia. Scobie, op. cit., p. 38. ASE. 29Fisonomia Regional de la Repdblica Argentina (Buenos reg: Editorial Nova, 1961), p. 43. 55 The area that was opened by the railroads, coloni- zation schemes, and Roca's "conquest of the desert" fell in- to the hands of speculators and large landholders. As was related earlier, the immigrants who provided the much-needed .labor had few jobs available other than as small landholders, tenant farmers or common laborers. "For each thirty-one who had a small parcel of property, fifty to one hundred hectares, sixty-nine were peons, renters of land or sharecroppers."30 Wheat proved to be an ideal crop for this system as it could be produced extensively on large estates, with a number of peons, or on small plots by one-crop farmers with little capital. In the cases of the tenant farmers, the short-term .contracts and uncertain social position led to the seeking of short-term gains. There was little interest in or ability to experiment with new crops and methods or to take any last— ing interest in managing the soil. The large landholders had neither the inclination nor the pressure to change production methods. By the turn of the century, however, crop pro- cauction shared almost equally with cattle more than 95 per cent of the nation's exports.31 From this period until a1'30th 1929 there was a notable increase in capital applied to farming and some emphasis on improving plant varieties. The agricultural sector, though, was more capable of \ ( BOGaston Gori, (Pedro Rafil Marangoni), El Pan Nuestro Buenos Aires: Galatea-Nueva Vision, 1958), p. 32. 31Ortiz, op. cit., p. 312. 56 expanding existing products with existing methods than of varying the output—mix and improving techniques. Agricultural expansion up to 1930 had been primarily a matter of extension, with the help of new capital, to new lands to produce the same product.3:2 There were few problems in raising and marketing cattle and crops. However, in the 1930's, good lands were no longer available for expansion and the World Depression made it difficult to market that which was produced. Without the customary ease in exporting and the consequent inability to procure necessary industrial goods, Argentina was forced to de-emphasize agriculture and produce some of the goods which it could no longer import. The agricultural sector necessarily relied more on internal demand to absorb its produce. The 1930's were hard times for the farmers and the relatively poor rural conditions en— couraged a readjustment of the marginal workers from the land to the city. The pressure for population shifts was controlled to an extent by the national government's attempts to assist the farmers. In 1933, a policy of purchasing grain and gueranteeing a market was introduced,,and in the same year, steps were taken to control the internal price and quality of meat in an effort to make it more exportable. In 1935, prJ-Ce controls were also imposed on grains. The successes \ 2Ferrer, Op. cit., p. 184. 57 of these policies varied in these few years, but by the end of the 1930's several good production years put an end to the controls. During WOrld War II, however, controls were resumed. After the War, and Peron‘s consolidation of power, the sale of crops came under government direction. Between .1945 and 1949 the agricultural harvests bore the full impact of Peronist policies.33 The Argentine Institute for the Pro— motion of Trade (I.A.P.I.) supervised the purchase and ex- port of agricultural produce and used the proceeds from the operations to finance industrialization. The farmer re- oe'ived compensation depending on government calculations of costs of production and, at times, this meant less than one- half the world pricefi?’4 With this system, while the external terms of trade for crops were improving, producers failed to reap the benefits. In 1950, cattle production, also, came L1rider government supervision, but was subject to a less stringent pricing policy. Actually, between .1949 and 1959, relative prices began to favor agriculture, but the trust and knowledge gap, as well as a lack of cOOperating factors, failed to elicit a response by the producer.35 \ 33 . . Ferrer and Wheelwright, Op. c1t., Sec. V, 23. c: . 34'Elizabeth R. D. Ravizzini, Investigacidn Sobre Pre- Wgropecpgrios (Buenos Aires: ’Secretaria de Estado de grleultura y Ganaderia de la Nacion, no date), p. 19. In 35Panorama Conjunto para el Desarrollo Agropecuario e lsguetrial (Buenos Aires: ConseonFederal de Inversiones, <1?), Vol.1, Sec. A, 232. 58 During the last half of Peron's presidency, between 1950 and 1955, farmers were offered some protection from a fall in the world prices by the I.A.P.I. purchases, but the internal prices were still low, and consequently, a low agri- <:ultural base was established on which to expand production. Since the farmers had failed to benefit from the good years in the 1940's, they had few reserves on which to draw. Peron's encouragement of industrialization drew workers from the land, while high import duties on machinery prevented their replacement with capital goods. The rural workers who 1e ft the land did not create cheaper machines for farm use to fill their positions. As a result, the area planted in crops was decreased approximately 32 per cent and much of the land was taken over by livestock producers who were less affected by losses in labor and shortage of machinery.36 This en- tailed a large scale shift from agriculture to ranching and a definite loss in the momentum which crop production had gained by the end of the 1930's. The Peron period resulted in financial losses, a reversal of the previous increases in capital and technology, and perhaps as important, a loss in confidence in the government. In 1956, following the termination of the Peron re- gime, strict government controls were ended and a number of Steps were taken to bring agrarian production back to pre-war \ 36Gori, op. cit., p. 128. 59 levels. Among the most significant agricultural contri— butions of post-Peron governments has been the creation of organizations to assist the farmer. The National Grain Board (La Junta Nacional de Granos) has freed the grain market, sustained minimum prices, and supervised marketing and quality standards. The National Meat Board (La Junta de Carnes), and its predecessors, established a central market in Buenos Aires and since has sought to improve meat market- ing methods. The research centers and extension agencies of the National Institute for Agricultural Technology (I.N.T.A.) have made progress in research and disseminated its results to farmers since its founding in 1957. These and other government branches are still rela- tively new and, in some instances, spent several years just getting organized. Nevertheless, they have achieved a de— gree of success, although it is difficult to appraise because of the variables in the agricultural sector. Between 1953 and 1960 agricultural production was almost stationary, but this lack of progress can conceivably be attributed to the influence and lasting effects of the Peron period.37 During the early 1960‘s when the results of the new organizations might have been felt, there was a prolonged drought which made the years poor ones for agriculture. Since 1964, pro- duction figures have improved and, in some cases, pre-war \ 37Ferrer, Op. cit., p. 215. '1 u I u ‘l Pi q: 60 levels have been reached, but these gains are at least par- tially attributable to the more abundant rainfalls which have produced sizeable wheat crops. If Argentina is to Obtain past levels of output, re— cent production increases must be sustained. Argentina is the only major grain exporter that now ships less abroad than before the War.38 In the pampas, certainly the richest agrarian zone of the country, agricultural output is not ap— preciably greater than thirty years ago. The national government is understandably concerned and is trying to in— duce increases in grain production, especially wheat, through its agencies and with price incentives, but has been relative— ly unsuccessful. The overall impression is not that people react negatively to changes in relative prices and govern- mental assistance, such as tax deductions or easy credit, or that there are unexplained changes in agriculture, but rather, that there are remarkably few changes. The postulation of reasons for the lack of response by the farm sector, as it is reflected in the Bahia Blanca- Sa“ta Rosa region is important since these reactions are cru- cial in determining what will be the farmer's response to a change in the transport input. \ 38Walter Kugler, La Argeptina en el Afio 1964, Dis- cursos Buenos Aires: Secretaria de Estado de Agricultura y anar‘ieria, 1964): P: 119' 61 Agriculture in the Bahia Blanca:§enta Rosa region.-— Since the Bahia Blanca-Santa Rosa region is physiographically transitional, a conscious effort must be made to overcome natural conditions if the farmer is to maintain consistently a high level of production. If this effort is complemented by proper choices in animals and seeds and types of machines, and the combination is applied intelligently, favorable re- sults can be, and have been, obtained. There are many Oppor- tunities to increase production without applying more capital. Impressive gains have been made by utilizing the methods which are suggested by I.N.T.A. A For example, by merely vary- ing the timing in planting of a particular variety of wheat, from April 20 to June 1, the agriculture experimental station in Guatraché showed a difference of 17 per cent in annual Yields over an eight year period.39 Probably a great deal Of the problem of stationary production could be understood if one could answer the question, "Why don't more farmers L18e the techniques which are available to them?" Two fundamental reasons for the lack of responsive- ness stem from the demographic background of the region. with its variety of land qualities the zone of Route 35 has more complex historical antecedents than other areas. With— in the fertile crescent, large landholders controlled much \ 39Roberto Oscar Leiboff, "Técnicas para la Incremen- t . ’ ’ ' o o a‘iclen de ’la Produccion Agropecuaria en las Regiones Margin- 39$ Semiaridas," Mimeograph (Bahia Blanca, Universidad Clonal del Sur, no date), p. 6. 62 of the early farming land through purchases from the govern- ment or speculation. This land was served by railroads and consequently, the owners had an option of working the land extensively themselves or renting it to tenants. Today, many tenants remain in the area, as do small land owners who were eventually able to purchase the land which they worked under contract. Farther south, immigrants were able to settle directly on some of the land since its relatively low productive capacity made it less desirable to Argentines. As a result, the area now has many small plots and, in sec- tions, at least 95 per cent of the land is farmed by its owners. In the drier, less productive areas the land was settled following Roca's "conquest of the desert." Large land grants were given after the zone was freed from Indian con- trol and many substantial holdings remain today. There are usually extensive cattle ranches if the land is managed by the owner, or tenant farms if the land is capable of crop production. This background, and the social evolution which followed, produced farms of all sizes and holdings of all types. Recently, changes have been in the direction of more land owners and a breaking-up of large farms. There is no good evidence that renters are less responsive than owners, or that farmers in so-called "economic-size units" apply methods more rapidly than those in larger or smaller exploi- tations. But, it is generally believed by the renter that 63 it is not good economic sense to make permanent investments or to spend time with land management unless he plans to use a farm for a number of years. Also, the small farmers agree that they do not have the money with which to experiment or the financial reserves which would allow them to take chances. Producers on large farms have little pressure to experiment, although it is done, when they have interest in the land. Generally, owners are more concerned with long-run production goals than are renters, and farmers on medium-sized plots are most apt to carry them out by using the resources avail- able tO them. To the extent that these maxims are correct, farmers in this area are not optimally operating with the best combination of the two characteristics, i.e. medium- size farm worked by its owner. Until the efficient combi- nation is reached there will continue to be a number of de- grees of responsiveness inherent in the basic structure and incentives to change will probably be less successful than would be possible with a different agrarian organization. A shortage of farm machinery is often blamed for low production and static techniques. Most farmers do have fewer machines.than they desire and many have fewer than they need, but the problem often is not as it is represented. Historically, machines have been relatively expensive and their shortage has arisen from a lack of purchasing power. However, since the early 1960's the use of machinery has been encouraged by the national government, with the most 64 conspicuous inducement being an income tax deduction of up to 100 per cent for expenditures on farm improvements. Specifically, farm improvements have taken the form of machines rather than investments in fertilizers, herbi— cides, or other factors which facilitate the application of new methods and increased production. Farm machinery has in- creased noticeably, but most of the increase has been com— prised of tractors or harvesters, which permit the perpetu- ation of present techniques in a less costly manner, rather than a device such as a "sub-soiler" which is capable of in- creasing yields in a new way. Hence, while there is a short- age of machinery it is not as pronounced as the shortage of the most productive machinery. In 1965, Walter Kugler, the Secretary of Agriculture, stated that, in some respects, the Argentine farmer was thirty years behind his counterpart in the United States and called for a technical revolution to narrow the gap.40 Cer— tainly he was correct in saying that more machinery is needed, but without accompanying changes in methods, yields per hec- tare will not necessarily be increased. Perhaps more pro- duction would be possible with more machinery and surely it would be at a lower cost to the farmer when he is using a tax deduction to buy a machine. But increased capital ex- penditures, alone, are not the solution to lagging production. 40Kugler, op. cit., p. 191. 65 The changing agricultural policies since the 1930's have imbued the farm psychology with a lack of confidence in the government. Producers have a reluctance to change methods or to make long-run plans. With the high rate of in— flation which has been customary in recent years, the per- vasive air of insecurity has been intensified. In general, "The Government" is a scapegoat for explaining the relatively low production and the continued use of traditional farming methods. The present effects of its actions perhaps do not justify the government's image. Nevertheless, time is re- quired to overcome the producers attitudes. The negative view of the government has been pre- served by just enough policies which farmers find noxious. First of all, there are many studies ending in proposals for changes in policy which, although they may never materialize, create uncertainty. Mare concretely, in the past, after an- nouncing a minimum price for grain, the National Grain Board agreed to raise this price if costs of production rose before the grain was marketed. This pledge was not honored. An- other time, the price was not announced until after all crops were planted so that farmers did not know which crop would be most profitable. Last year, 1966, an emergency tax was levied on land owners without previous warning. This year, there are plans to reduce the income tax deduction for farm improvements from 100 per cent to 60 per cent and this is seen as harsh in light of the progressive tax rates, which 66 rise to a maximum of 45 per cent. The provincial government of Buenos Aires is adding to the government image and of- fended the farmer's sense of fair play by attempting to col- lect unpaid taxes. The prevailing thought, which has some validity, is that the government receives a great deal of money and produces few tangible results in exchange, e.g. roads and buildings. On the positive side, the national agencies which promote crop and cattle marketing, the research and extension services of I.N.T.A. and the relatively easy credit for farm improvements are beneficial results of past expenditures. The problem has been that the benefits have not been recog- nized. Much of I.N.T.A.'s research remains unapplied. Each year money to be loaned for the purpose of farm improvements is not requested. While the National Grain Board is ap- preciated, especially in its sustaining of minimum prices, one hears more about the absence of compensating prices for cattle and sheep. The psychology of the farmer is partially understandable in view of his often uncomfortable history, but it appears that there presently are fewer reasons for complaints than in the past and that the atmosphere of re— luctance to change is itself a greater inhibition than op- pressive government policies. Inadequate transportation is also regarded as a limitation on production. Although it is seldom impossible to sell those goods which are produced, there is a 67 disinclination to send them to markets in Bahia Blanca and Buenos Aires where prices are higher. NOrmally, the sale of both crops and livestock takes place within small towns and few problems arise in their transportation. The supply of trucks is adequate for desired deliveries so that the only drawbacks are the permanently inadequate roads in the sandy or forested areas and the roads which are temporarily im- passable in times of abundant rainfall. In the first case, products which cannot be Shipped cannot be grown, and, in the latter instance, there are, at worst, delays and cost increases. When products are sent to Bahia Blanca or Buenos Aires more difficulties are encountered. The problem, though, is more one of delays than of inaccessibility. In sending grains to Bahia Blanca railroad cars can be ordered several days before they are needed or trucks can be hired with less advance notice. Trucks can be stopped by rainfall and, also, often must wait in the port several days before unloading. In the cases of both train and truck, then, there are problems with delays, with those in trucking being more expensive to the sender. Unlike wheat, there is no problem in unloading livestock, but delays caused by im- passable roads are more costly in terms of losses of animal weight. Also, the prices in livestock markets fluctuate ap- preciably and one or two days can make a considerable differ— ence in the total value of a truckload of cattle. 68 The time element is viewed as the primary reason for not producing dairy products on a more than local scale. Daily train service does not exist and trucks cannot reach Bahia Blanca each day as would be required in the case of milk. It is debatable whether there is adequate demand for dairy products from all of the zone of Route 35 and whether the more attractive prices for cattle in Bahia Blanca and Buenos Aires would remain as high if producers in the zone had easy access to the markets. However, improvements in roads surely would reduce the time and cost necessary in marketing agricultural goods. Any further effects would de- pend on how the farmers use the newly released resources. A factor which is extremely important, but difficult to evaluate, is the farm psychology which exists. This is as much a result as an explanation of other problems. The inertia within the rural sector is acknowledged by the I.N.T.A. technicians, the minority that attempts to bring about changes, and even those that have been using the same procedures for years. Some attribute it to Latin blood, others to lack of pressure to alter methods because life is comfortable without them, and still others see the cOmbination of all of the factors which inhibit production as signifi- cant. Certainly the failure to undertake major investments can be attributed to unprofitability or lack of confidence in the economy, but why someone will not plow twice rather 69 than once or choose the best variety of wheat to plant and plant it at the most opportune time is difficult to explain in terms of confidence and profitability. Those that have been successful with simple but fruitful changes do not seem to have a great influence on the majority who continue to operate with "plant and hope" methods. Kugler showed an awareness of the problem in writing that the nation must change the attitudes and modify the forms of thinking of many farmers so that they will use the natural factors available.41 A recent study has found that the principal cause for the backwardness of the agricultural sector is the failure to use the new technology and this failure results from a lack of willingness as well as a lack of means.42 While the problem on the national level is to make more technology available for use, that on the local level is to make more use of what is available. From these limiting factors, one, highway transpor— tation, was chosen to ascertain if its improvement is capable of increasing agricultural production. Its effects might be either direct in reducing costs or increasing production or indirect in reducing some of the other inhibitions in the agricultural sector and thus augmenting production. In either 41Ibid., p. 38. ’ 42§l_§ector Agropecuario Frente a la Expansidn Eco- ngigg (Buenos Aires: Consejo Nacional de Desarrollo, 1962), sec. II, 50 70 case, they can be isolated more easily if studied on a regional basis. For this reason a particular partido, Puan, is being focused upon in the ensuing chapters. CHAPTER III AGRICULTURE IN PUAN Puan is the third largest partido in the province of Buenos Aires. With its dimensions of sixty kilometers by one hundred fifty kilometers at the broadest paint it is about the size of a county in the United States. Its elon— gated shape places its limits from about eighty kilometers to almost two hundred kilometers from the port at Bahia Blanca and this shape and location make the partido ideal for more intensiVe study. Puan includes land within three of the four major rainfall zones in the region between Santa Rosa and Bahia Blanca and contains representative types of soil and vegetation.1 The forty—four unpaved kilometers and a paved sector ofRoute 35 which traverse the partido allOw a comparison of expectations and aspirations before the im— provements of a dirt road with the actual effects of paving 'in an almost identical area. The highway, because it is near the 500 millimeter isohyet, divides Puan into fairly definite north and south regions with distinct characteristics. The north, about two-thirds of the area, is typified by small 1See Map 3, Showing the rainfall zones in the region and specifically, in Puan. 71 - 72 farms, intensive methods, and more diversified prOduction than the south. Most farms in this region are from 200 to 400 hectares, with the largest reaching 2500 hectares. The. south contains extensive farms as large as 10,000 hectares and, where the conditions are better, as small as 400 to 500 hectares. .Road quality varies generally according to these north-south limits as well. There is a large difference be- tween the best pppge roads of the north and the worst tracks in the south, where a road is a section of flat land on which the growth of bushes and grass is not high enough to prevent a pick—up truck from passing. Between these ex- tremes, bOth sections of the partido contain dirt roads of varying qualities which are occasionally impassable because of rainfall. These farms and road characteristics can be found within other partidos of Buenos Aires or departamentos of La Pampa, but not within one governmental unit. Puan ranges from the fertile land in the north where 650 millimeters of annual rainfall make possible the growing of wheat, oats, barley and rye as well as the raising of cattle and sheep, to the south where 460 millimeters of rain— fall, poorer soils, and natural obstacles, in places, allow the production of cattle alone. In the north only about 10 per cent of the land is unarable and although animal pests exist, they do not present production problems. The "economic—size" farm is considered to be 300 hectares, but 73 it is possible to live well with less. Mast of the renters of land are centered in the northern section of the partido on the smaller plOts on which the wheat crop is more certain. In the south, on the other hand, about one-half the land is not suitable for cultivation and at least 500 hectares are considered necessary to provide a reasonable living. Wheat, rye, and hay barley are grown on some farms in the south, but, with the forests and sandy soils, crops frequently can- not be grown. Livestock can graze in the forests and under— brush, but here, too, there are limitations. The wild boar, pumas, and foxes make sheep production impossible in some areas and can limit lucrative activities to cattle alone. Puan is more fertile in the extreme north and wilder in the extreme south than most of the Bahia Blanca-Santa Rosa region, but the major part of the partido is similar to other partidos and departamentos in that it is a transitional area which is' conducive to both livestock and crops. People.-—Puan has a pOpulation of 21,144, grouped mainly in several centers, the largest being Darragueira (4,748), Puan, the capital (3,387), and Villa Iris (1,911).2 Each of these towns (and the others shown on Map 4) has or had a train station and is now served by an adequate dirt 2The figure for the partido is a 1966 estimate while those for the towns are from 1960. All data are from the Direccion de Estadisticas e Investigaciones, Ministerio de Economia y Hacienda, Provincia de Buenos Aires. 74 MAP 4 Towns and Transport Networks in Puan \ / \"\ 5 I I 1) PUAN ‘ I, I I ’ I / I m umcu um / I I / V‘- many I 1’ \ azomuoo 2’ I . / ’ BORDEHM'E \ \ I I 1» n VADEO tom \ (1" ' / ‘g‘ LECUBE \'It A o l ‘_ ( ‘ mu. \. \\ RONUEAU \ ,r' z '— —"-*—- _t— .0-0 9) 5 Z \ AHIA” h Towns —.-—-- Proviniciol Boundary ---- National Highway . BLANCA /§ ,7, .— Nationol Highways Main Proviniciol Roads _._._. Railroad 75 road. There have been some shifts from farms to towns and towns to cities, but the size of the population is not ap- preciably different than it was twenty years ago. The actual on-farm population has been reduced by the substitution of machines for labor and the improved mobility which allows a farm owner to live in a town or city while working the land, but this decrease has been compensated for by the greater number of persons providing services within the towns. People living in the northern and southern extremes of the partido can commute from Bahia Blanca by National Highways 33 and 22 respectively. This is more common in the south, as the farms are larger and one can more easily leave a foreman in charge. In the north the distribution of the towns is such that frequently a farmer can live in town and reach his farm, by car, within fifteen to twenty minutes. More producers live on the farm, however, and choose between Route 35 and the railways for travelling or for sending products to Bahia Blanca. Puan is similar to other partidos in showing a slow overall increase in the growth rates of both pOpulation and production, with losses in some areas being out-weighed by gains in others. It differs from others in that some pro- ducers have the choice of taking alternative routes to Bahia Blanca while farther west the people must choose between railways and Route 35. 76 The most recent agricultural census, in 1960, showed Puan with 1,381 farms on its 561,584 hectares.3 The size distribution of the exploitations is broad, which is repre- sentative of the area, but more of the variance can be ex- plained by economic necessity than in the cases of other partidos (see Table 2). More recently, the trend has been toward more renters purchasing the land which they farm, which means, since they seldom rent plots of more than 500 hectares, more land owners and smaller holdings. Because of the category limits, precisely how much land is farmed in “economic units" of 300 to 500 hectares is not known, but as much as one-half could be within this range. Actually, there do not seem to be great differences in methods between pro- ducers on various size farms in the same zone, although dis— tinctions are noticeable between zones because of soil and climate dissimilarities. There does appear to be some variation in procedures between renters and owners of land in that the former are more likely to farm a small plot intensively with an emphasis on wheat rather than a mixed farm. If the renter plans to purchase the land or to renew his contract, as is the custom, his techniques vary little from those of land owners, with the exception that his investments tend to be in goods which , 3Censo Nacional Agropecuario, 1960 (Buenos Aires: Direcion Nacional de Estadisticas y Censos, 1960), p. 56. 77 can be removed from the land. In 1960, the land owners, who comprised about 50 per cent of the producers, farmed 60 per cent of the land, while the rest was worked by renters.4 Table 2. Distribution of farms by size in the partido Puan, 1960. Number Percentage Percentage Hectares of of Hectareage of Farms Farms Hectareage Up to 25 100 7.3 1,093 .2 25-100 136 9.9 10,305 1.8 100-200 290 21.2 47,975 8.5 200-400 506 37.0 153,501 26.3 400-1,000 268 19.5 157,209 28.0 1000-2,500 58 4.2 89,827 16.0 2500-5,000 ll .8 34,362 6.1 5000—10,000 9 .7 57,312 12.0 Source:’ Censo Nacional Agropecuario, 1960 (Buenos Aires: Direccion Nacional de Estadisticas y Censos, 1960), p. 56. As is typical of the area, the majority of income arises from agricultural industries. In the only income study in Puan, in 1964, crops accounted for 51 per cent and livestock for 25 per cent of total product. The remainder 4Ibid. These figures are not stated precisely be— cause of inconsistencies in data. 78 of the output was primarily services to persons in agri- culture. Construction and industry, between them, were re— sponsible for only 1% per cent.5 _Qggp§.--Wheat is and has been the predominant crop in Puan and annually constitutes about 90 per cent of the marketable harvest. The soils and climate of the area are very suitable for "hard" wheat, which is ideal for making bread and has a high export value. 0f the many varieties of "hard“ wheat which exist, there are several which are most often used, depending on the timing of the rainfall and other factors such as differences in resistance to pests, strength of stalks, suitability for pasture and idiosyncrasies of the soils on particular farms. Each variety has about the same yield if its "life-cycle" is coordinated with rainfall and the humidity of the soil. The technicians at the I.N.T.A. station near Bordenave have ascertained which varieties of wheat are best adapted to the zone, and their recommendations are well—known and often applied. Even when prescribed tech- niques are not followed, the wheat harvest is typically more lucrative than that of other grains and if there is only one crop on a farm, it is usually wheat. 5From the Direccion de Estadisticas e Investigaciones, Ministerio de Economia y Hacienda, Provincia de Buenos Aires. It should be noted that 1964 was a very good year for crops and that the numbers of livestock were lower than normal be— cause of the drought from 1960 to 1963. Crops and cattle usually divide agriculture's share of the partido's income in approximately a 6.4 ratio. 79 Despite the advantages of wheat, farmers also culti- vate barley, oats, and rye. About 10 per cent of the marketed crop of the partido is brewery barley, while hay barley, oats, and rye are used primarily to provide pasture for livestock. When the yields of these pasture crops are substantial they are sold, but, more frequently, the harvest furnishes seed for the coming year only. Even brewery barley is generally not chosen as a crop to be sold at the beginning of the year, but, rather, is cultivated when the rains do not provide enough moisture in May or June to plant the desired variety of wheat. This alternative is available, however, only in the middle and northern sections of the partido where the chestnut and brunizen soils are suitable for brewery barley. The cultivation of the other cereals also varies with soil qualities; barley for pasture, like wheat, can be grown in practically any area of Puan; oats are most common in the north of the partido where there are brunizen soils and more abundant rainfall; and rye is found in the southern and western regions of the partido, utilizing the chestnut and sandier soils (see Map 5). When the crops are planted spe- cifically for pasture, a variety with a long life-cycle is chosen so that the planting can take place as early as March. The harvest, if it is thought profitable, can then be com- pleted before that of the wheat crop, which is in December or January. The relative proportions of the grains grown and sold in Puan are illustrated by 1966, a typical year, in 80 MAP 5 Puan SoHs figmmum Sandy deserfic L22] Bruni z e n .Regasol 81 which there were marketed 130,000 tons of wheat, 15,000 tons of brewery barley, 2,000 tons of oats, 1,500 tons of hay barley, and 1,000 tons of rye.6 Fruits and vegetables are not cultivated extensively, even where the soil and climate are conducive to their pro- duction. Their market is limited to local towns and several farmers can usually satisfy the demand. There is no type of fruit or vegetable produced on more than 5 per cent of the farms, since most people find it easier to purchase them.7 A shift in the composition of products is not likely because of the relative advantage which grains have gained in both production and marketing. .Livestock.--About 60 per cent of the land is used for the production of the 175,000 cattle which exist in Puan. On all but seventy of the 1,381 farms breeding and/or fattening of cattle is practiced, with three—fourths of the land de- voted to breeding.8 In the north, where each hectare can support one bovine, ranching is viewed as a less profitable, but more secure activity than is cultivating wheat. In the south, on the more extensive farms which require as many as three hectares per animal, cattle are seen as the primary, 6From Ministerio de Agricultura, Buenos Aires. 7Censo Nacional AgrOQecuario, 1960, pp. 87-91, 99- 110. 81bid., pp. 63, 128. 82 and sometimes only means of earning a living. The common practice in both the north and south is to breed the animals and then send them further north, to central Buenos Aires, for fattening. However, in some cases, even in the less fertile south, the pastures are capable of fattening the ani- mals and sales are made directly. The process of raising cattle can be simple. It is begun by accumulating either Aberdeen Angus or Shorthorn cattle, depending on preferences, since there is little difference in raising the two varieties. The cattle are grazed on natural or annual pastures, bred, and sold when their ages, weights, or prices suit the producer. A minimal amount of management is required, if the farmer chooses to let the cattle breed and feed freely. About 70 per cent of the cattle ranchers operate with techniques midway in com— plexity between this most simple procedure and the methods which are used successfully in more agriculturally advanced nations and suggested by I.N.T.A.9 Ideally, pastures should be better managed, perennial pasture planted, and the required amount of grazing land reduced, while a reserve of hay is ac- cumulated. The animals using this feed should be systemati- cally selected, vaccinated against foot and mouth and Bang's diseases, and maintained in clean pastures. Attention ought to be given to the number of bulls and cows within each 9Information received from I.N.T.A. station at Bordenave. w Ill I'll u it u r- 83 pasture so that the number and quality of calves can be con- trolled. It is best to send calves to be fattened as soon as they are weaned, if fattening does not take place on the same farm. Actually, even this most complicated process is not difficult and entails only more concern for sanitation, types of food, and a conscious management of the reproductive process. The low animal production is evidence that the best methods are not used.10 According to the I.N.T.A. tech- nicians there is an awareness of many of the proper tech- niques, but farmers are either not receptive to change, or lack the technical or economic resources to adopt them. Sheep were introduced on a large scale during the De- pression when it was valuable to have a cash producing pro- duct at least three times per year; it was customary to sell wool twice and a percentage of the animals at a third time. Since that time they have become common and producers on more than 1,000 farms keep between 490,000 and 500,000 sheep.ll As many as four sheep can be fed on each hectare and the pasture can be of a lower quality. They are an inex- pensive form of on-farm consumption and provide food in- surance against droughts. This is not the case in the south, 10Only fifty-five cattle are produced for each 100 maintained as compared to about 90 per cent in a similar area in the United States. {lCenso Nacional Agropecuario, 1960; p. 132, and Direccion de Estadisticas e Investigaciones, Ministerio de Economia y Hacienda, Provincia de Buenos Aires. 84 however, where they provide a cheap source of consumption for carnivorous animals if they are not corralled at night. The extra effort and risk required in caring for them is re— sponsible for their absence in the wilder areas. Recently, in the north, the raising of sheep has re- cently become less popular, since the money price is some- times lower than that of two years ago, and this has been with a rate of inflation of greater than 25 per cent per year. With the fluctuating prices in Buenos Aires, one of the marts for producers of Puan, a farmer often receives less for his animals than it costs to raise and ship them. They are still maintained for their wool, but of the two va- rieties, Lincoln and Corriedale, only the finer wool of the latter is withstanding the competition of synthetic fibers. It is troublesome to gather sheep for shearing their wool and eliminating their parasites, to which they are very sus- ceptible, and in many cases their economic benefits do not outweigh their disadvantages. Pigs are also raised to a limited extent, but they are used primarily for on-farm consumption or to satisfy lo— cal demand. .Chickens, eggs, and milk are used by restaurants and stores within small towns. Cattle and sheep easily domi— nate the animal products and are the only ones marketed on a large scale. Mixed farm methods.--The mixed farms of the north require more complicated management than a one-product 85 exploitation.12 Suggested methods are the same as in the south, where only cattle are reared, but the balancing of crops and cattle makes their implementation more complex. Since livestock represent insurance against a poor crOp as well as a source of food and income, the producer must con- sider more factors in administering the farm. Even when more variables are introduced, however, there are few differ- ences in the techniques applied. At the beginning of the year, there are tentative plans to use about one-half of the fields for cattle and one— half for wheat. The farmer is very much dependent upon rain- fall and is prevented from formulating more than rough ideas of how long to keep an animal before it is sold and which va- riety of wheat to plant if the precipitation falls at the de- sired time.13 Since crops are bound more by the climate, livestock become balancing factors which can be manipulated according to the conditions which arise. While cereals re- quire decision as to the time of planting, little more at— tention is necessary and, after they are sown, the farmer needs only to wait for the rain to determine the success of the crop. 0n the other hand, cattle and sheep are managed f 12Since there are 1311 farms with cattle and 1094 with wheat out of a total of 1381 exploitations, there are over 1000 mixed farms in the partido. These statistics are from the Censo Nacional Agropecuario,!l960. 13See Graphs l and 2 showing yearly and monthly rain— fall in Bordenave and demonstrating the variability in precipitation. 86 me in .v 0» On .0 sh ab mm rm an «a .n wwm. uco sham. voo. Icon town fi- O2... 123 18* :3. too. tog: I 000. .5.: coospom gonoutom E 2553". atom» _ Im392: run mom. can h¢m_ couszm 93:06.30 5 2306...; 32...... use >233... :3... Co :353. 5.3 2:5 Co 35:32 n Imamo Hooum q0H muooum umm "mommucmo mauumo .H. "ouoz m.m momqmd oooqohm NM 000.0H 00 00m mammawm ¢.m momamH 000.00m 0N 000.0N 0m. 00¢ mBOU 0.N momqma 005ammh mv 000.MH m0 CNN mw>HmU Hmoum m.m mom.wa 000.~no mm oooqwm 00 00v Hooum umm mmowum mwamm xoswa xuswa xosna HmEHcd OHHM HmEflcfl oauumo mo make 00 mom Ham mom mom Ham Ham ammucmouom #moo osam> mHmEHc< osam> mOmom moaflM_ mm mumou Eoum ucom mauumo How moofium I {I .mocmam aflnmm ou muflosmmuumn moamm mo mommucoouom mm mpmoo coaumuwommcmna .¢ manna 120 lumxumE «Ilouuoe mmmo AmmflummlwoDOEwmv .Q.m.m .acaccoam .s chases .coflumuwcmmwo mad "mmousom .mocmam manmm on mauH maaa> 80am mucmsmaam now mam mono Hoes .m. .MUCmHm manmm ou muflosmmuumn Eoum mucmEmflnm How mum dump madam ANV .moflufiamsv 0cm mmOHHm wanmwum> mo mommnm>m mum newsman omens .Hv “mouoz o.~ ooo.om ooo.oom.a coma coca moawx 0H omnmou m.H 000.0m 000.00¢.N coma 000a mOHHx 0H mcwh Hops o.m mom.ma ooo.o~m omm coca Hmeficm a AEMH 83m m.m mom.ma ooo.mom omm 0mm Hmeflcm H QEMH 8mm 5.0 m00.mH 000.0NN 00H ooma HmEHcm a QEmH mumuummv m.ma mom.ma oom.aoa oma 0mm Hmeflcm H 83m madam mooflum mmamm rogue xosua gonna was: was: unsponm mo mommucwouom mm Ham Ham and mom aflmmm mumou coaumunommamua umoo asam> muflco momom .Hoo3 0cm momnm How mwOHHQ moamm mo mommucoouom mm wumoo coaumuuommcmue .m magma 121 rates have been increasing in the past years while the abso- lute price for sheep is lower than in 1965. Even if trans- portation costs were reduced considerably, sheep production would not be much more lucrative because of the low retail price. The data presented for livestock and wool are only approximations. They represent averages in June 1967 and are subject to change because of the variable prices and qualities of the products. Nevertheless, it is not likely that they will be altered enough to make the transportation costs as percentages of sales prices substantially different. With transport comprising 8.8 per cent of the sales price for wheat; cattle and wool having a much smaller proportion, between 1.3 and 3.4 per cent; and sheep a slightly higher figure of up to 12.3 per cent, an estimate of about 8 per cent is a reasonable approximation of the upper limit for agricultural products in the partido.8 If the net profit is assumed to be 25 per cent, this means that transport costs comprise about 10 per cent of the costs of producing and marketing agricultural products. The monetary benefits which the truck drivers pass on to the producers must fall within a range from 0 to 10 per cent of the costs of production. The unpaved section of Route 35 comprises just over one-fourth 8With grains accounting for 50 to 60 per cent of the value of production and cattle for 20 to 25 per cent, sheep and wool are comparatively insignificant. Consequently, the relatively higher transport costs for sheep and lower costs for wool do not strongly affect the 8 per cent approximation. 122 the journey from Bahia Blanca to Darragueira and its improve— ment could not have a large effect on the total costs of shipments. Any gains which are possible are not certain since the official truck rates would not have changed. These computations have been made assuming that the present conditions will be in effect when the road improve— ments are made and this seems to be the best assumption. How— ever, it is informative to postulate a competitive trucking industry which would pass on all of the gains from road im- provements to the producers, or to the marketing intermediar- ies who would, in turn pass them on to the producer. The latter assumption is reasonably applicable to the present economic system but the former is improbable. The official rate, being set in the capital, is not likely to change be- cause of road improvements in the southern portion of the province. Furthermore, the failure to account for costs gives the truckers no knowledge of what should be passed on to producers and almost any apparent gain is rationalized with the high rate of inflation because costs are also rising. The best cost data for vehicle operations and main- tenance are those from Transportes Argentinos, Plano de Largo Alcance which were taken from the American Association of State Highway Officials pamphlet and modified to Argentine conditions. It is assumed that after a road improvement the highway will remain in its improved state and that traffic 123 will continue at the same rate. Actually, both of these as- sumptions are contrary to the recent experiences within Puan, as highways have deteriorated and traffic has increased with time. The money costs are no longer applicable so they have been converted to indices.9 Vehicle _Rgag Paved Gravel Dirt Truck (10-12 ton) 54.9 80.1 100 Truck (25 ton) 53.8 80.1 100 Since there is no appreciable difference in relative costs of operation for trucks of unequal tonnage on any one type of road, the costs will be considered to be in a 100:85:55 relationship for all trucks. That is, the costs of driving on paved roads and gravel roads are 55 and 80 per cent re- spectively of the costs of driving on dirt roads. With these cost data the production within the radius of influence of Darragueira was examined. Darragueira was chosen because it is the marketing center in the partido most distant from Bahia Blanca and because it is necessary to travel more provincial roads before arriving at Route 35. It is assumed that Route 35 is paved; that all provincial roads are gravelled; that products are hauled by truck; that 9Transportes Argentinos, Plano de Largo Alcance,_gp. cit., App. I, p. 41. 124 traffic will be diverted to the new pavement; and that move- ment from farms to town is on unimproved local roads. With these assumptions the greatest amount of cost decrease should be demonstrated, so that the theoretical model will indicate the largest gains which could accrue to truck drivers and be passed on to producers.10 The above indices are multiplied by the number of kilometers of a section of highway of a given quality to arrive at the results in Table 6. It is demonstrated that with a national and provincial road con- struction program, (a more ambitious proposal than can be ex- pected), the operating costs for vehicles could be reduced 18.9 per cent. Since traffic diversion requires more kilo- meters to be travelled than the present route direct to Bahia Blanca, the savings would be slightly less. Even if 20 per cent is accepted as the upper limit for savings for truck drivers and the entire amount is passed on to pro- ducers, this is applied only to the 8 per cent of the product sales prices or the 10 per cent of production and marketing costs which transport comprises. With the optimistic as- sumptions that have been made, the decrease in total costs would not reach 2 per cent. It is this 2 per cent which can be viewed as an increase in the quantity of production marketed since it is no longer necessary to pay this amount (in kind) for transportation. 10This excludes losses arising from delays caused by rainfall or "tie-ups" at the port, so that on some occasions losses would be greater. 125 .mucmam mason 0cm muwosmmwnma coo3uon mpmou may on omflammm ovumoam mwumn on ocmam .mocflucowna mmuuoomCmHB Eoum mumn. "mousom m.mH om0.ma 00>.0H dance 0 com com .muoumsoaax m. nonmam mwsmm I smopuom o oma.e oma.a .mamumsoaax 680 smoouom I cmeuoo com me o~¢.m oo¢.¢ .mamuwsoaax we. :mEuoO amm I Hanson mmEmm on om omm.m 008.8 .mamumsoflax ea. woouom mason on I m>mcoouom om oom.a oom.a .maoomsoaax ma. o>mcotnom I mwflosmmnumn o oom.a oom.H .muwuosoaax ma. 2309 on same cofluospom ucoEw>onmEH uwum< ucoEw>omeH ouowmm pmom mo cowuumm ammucoonmm muouoEoHflM x mHmDmEoHflM x xoocH umoo xotaH umou .mm ousom new acmou Hmwocfl>oum mo ucmEo>0HQEH man no pasmon m mm madman wwnmm 0cm muflmsmmuumn coo3uon mumoo coaumuwomwcmuu ca mcofluuspom .0 mHQmB 126 Origin and destination study.——It was originally planned to make an origin and destination map to show freight movements by rail and road so that the degree to which road improvements would reduce costs could be estimated. A ques— tionnaire was delivered to the managers of the c00peratives and the largest private enterprise dealing with grain to gather this information (See Appendix 1). Also, the truck- ing companies which haul livestock in the zone were ques- tioned about the quantity of animals shipped from specific points. The relative percentage of products sent by truck and train are easy to acquire, but the total product trans- ported is difficult to obtain. It is estimated that 80 per cent of the grain is sent by rail and about 80 to 90 per cent of the livestock and wool are sent by truck, but, be- cause of institutional factors, the estimates of quantities involved are not accurate. Sales on the "black market" pre- vent accurate disclosures from producers and marketers so that it is difficult to discover how many products come from a particular area. There are totals listed for loads at each railroad station, but, without a knowledge of the quantity of freight sent by truck, these figures are dubious guides for projections. The bills of lading of trucking enterprises could supply the information, but they are filed in chronological order, with no concern as to origin or destination. The time necessary to compile the data would not be justified since the end result would still not show 127 all of the freight shipped--only that by major companies. Often statistics are in non—comparable forms such as heads of cattle and weights of shipments so that an interpolation is required with already incomplete figures. A highway traffic study could provide a clue to the amounts carried from given zones, but one is available only for one point on Route 35 between the provincial border and Bahia Blanca and this is for only three week-end days of December each year. No trends are evident in the available figures, except, perhaps, more traffic in the years since the paving of several sections of Route 35. This can be ex- plained by increases in vehicles and problems with railroad service as well as by any other factor. Even if there were a distinct trend, a sample based on three days of week-ends on successive years, with no notation as to the type of pro- ducts carried, allows no unequivocal conclusions. A problem has been avoided by working with the marketing center which has the highest transportation costs, Darragueira, and showing that the costs are insignificant. The areas nearer to Bahia Blanca and Route 35 would show smaller cost reductions. Thus, while precise statistics are not available for the partido, the upper limit of cost re- ductions has been calculated and, because it is so low, the more detailed figures for intermediate areas are not necessary. 128 Role of transport.-—The future traffic flow depends on the relative improvements in roads and railways and the subsequent rate differentials. Whenever the rates are close enough to prompt a comparison of services, the railroads lose business, but there is no guarantee that the service differential will continue. The railways, being national enterprises, are more likely to make large changes at one time, while changes in trucking are slower because of the numerous independent enterprises. 0n the other hand, even with new cars and better facilities there is no guarantee that services by the railroads will change appreciably, while with improved highways it can be relied upon that truckers will take the easiest route. There are too many possibilities to predict the future, but, if the past is the best predictor, no rapid changes should be expected and the assumption that conditions will continue in more or less the same manner is the most accurate possible. Without knowing the future, it can be stated that even the estimated maximum cost reduction arising from high- way improvements is not a large percentage of total costs. While the cost reduction possible ranges from 1 to 2 per cent if the production climate remains unchanged after road construction, even if all freight were assumed to travel without cost, the decrease in costs of production would' reach at most, about 10 per cent. Evidently there are not 35?. use bi.‘ ave Vie 129 many problems in selling goods or in transporting them from the farm to the market. A greater difficulty is encountered in the port than in the fields. If road improvements are to increase agricultural production substantially, it must be shown that the time and cost reduction in sending products to market can be used advantageously, or that the improve— ments will promote a higher output in another manner. The use of these savings in time and resources and other possi- bilities of increasing production which transport makes available are examined in Chapter V on the basis of inter- views with producers in Puan. CHAPTER V INTERVIEWS IN PUAN If agricultural production is to be increased sub- stantially by road improvements, as hypothesized, the major impetus must be provided by the realization of new oppor- tunities which accompany them or by the application of pre- viously unutilized techniques which they promote. It has been shown in Chapter IV that lower truck tariffs will not appreciably reduce the costs of production for agricultural goods. Here, increasing production in a more indirect manner was studied through personal interviews with farmers from Puan. If the less direct effects of improved highways are to be assessed accurately, it is essential to know the post-construction plans of the producers. Most studies as- sume that people will take advantage of the opportunities which become available. A consideration of expected actions on a regional level allows the proof of this assumption. Al— though it cannot be inferred from high aspirations that the effects of construction would be significant, a failure to anticipate increases in production is an indication that they would not. If road construction is to have a substantial impact, intentions to expand production or produce in a more 130 131 efficient manner are important if not necessary. The ex— pectations of the producers were examined in reference to other factors which would facilitate or hinder their fruition. With this information, the probable effects of highway improvements were estimated. _Qgestionnaire.--A questionnaire for farmers in Puan was prepared, following a preliminary examination of the partido, so that data relevant to the farmer's expected re- actions could be obtained (see Appendix 2). The primary pur- pose of the questionnaire was to gather information about the relationships between road improvements and agricultural pro- duction, but it also provided an opportunity to acquire an understanding of the methods, problems and desires of the farmers. There were sections soliciting a description of the farm, discussions of the problems with natural elements, the sales processes, the role of transportation, the effects of government policies, and the factors determining investments, and a chance to make comments about any subject not mentioned. The order and form in which the sections were used was considered important. ‘Always, they were employed con- secutively, but variations in the sequences of specific questions were common. Each section was used as a topic for discussion, with any question which could not be brought into the conversation asked specifically before proceeding to the next section. The parts of the questionnaires con- cerning the sales processes and transportation were 132 emphasized since they provided the most significant infor— mation. Questions bearing on government policy and invest— ments were asked only when there was a rapport established with the interviewee. The presence or absence of these questions was not crucial since those sections utilized di- rectly in the study had already been completed. The questionnaire was delivered orally so that there was more flexibility and clarity than would have been the case had the farmers written the answers themselves. There was not a large communications problem although three farmers needed "interpreters" for some questions (an "interpreter" in this case is one who translates NOrth American Spanish to farm Spanish). Several questions about problems with soils, rainfall, winds, weeds, and other natural factors followed a description of the size and location of the farm. The re- sponses to these questions provided little information of practical value for the study, but furnished an Opportunity for the mutual adjustment to accents. Also, beginning with these innocuous subjects helped allay suspicions regarding the ultimate motivation of the questionnaire e.g., fear that information given would be used for tax collections. Sample Selection.—-Puan was divided into sixty-eight divisions of 10,000 hectares and a farmer was chosen from O I l I I O I each for an interV1ew. Location and d1stance are cruc1al 1n 1This was not possible on the border of La Pampa so that there were eight sections of 5000 hectares. The study would not have suffered from the projection of the section in- to La Pampa since the transportation problems are the same. Nevertheless, all producers were taken from Puan. See Map 6. 133 MAP 6 Sample Selection from Puan R — Land Renters 0 - Land Owners l-68 -Number of Divisions Number-Hectares a ‘0 ton-n. 134 transportation so a method of sample selection was employed which allowed observations of those producers situated next to Route 35 as well as those in the extremities of the par; .EiéQ- It would have been possible to base the sample on the sizes of farms or the system of land holding. Both of these methods, however, could easily have led to a poor geographic distribution. Smaller farms and land renters are centered in the north of the partido, where there are fewer transpor- tation problems, while larger farms and land owners working the land are more common in the south where road transport is often difficult. These approaches could have led to in- adequate geographic coverage and to conclusions that those who work larger farms and owner-producers have more transpor- tation problems. While they may have, this is not because of the size of the farm or the system of land holding, but, rather, the location of the farm. The geographic sample was not biased by these locational differences and, in fact, was 'based on them. It did not prohibit the drawing of inferences from responses of both owners and renters and producers on large and small farms, since representatives of these classi- fications followed from a sample based on geographic differences. The selection of farmers from the sixty-eight divi- sions was possible in several ways. The generally sanctioned Iwethods entail the use of random numbers in choosing a sample f'h 135 either from the total population or from stratified segments of the population. These were considered unrealistic, how- ever, in view of time limitations, inaccessibility of some farms in the south and the difficulty in obtaining accurate information from farmers without a personal introduction. A random number method would have been possible if allowances were made for secondary or tertiary choices when a candidate was not available-—either because he chose not to answer or was away from the farm. It is doubtful, however, that the time and expense would have justified the results. A list of names was procured from the I.N.T.A. sta— tion which provided both candidates and a type of intro- duction as a substitute for these more orthodox approaches. 'With this list, though, there would have been definite biases toward the more progressive farmers who work with I.N.T.A. and in the direction of producers of crops, since the tech- nicians from the station work with cultivation rather than livestock. The method finally decided upon was, in a sense, a compromise between the two types which have been mentioned since it had a random nature and the advantage of providing an introduction. In the northern two—thirds of the partido jpractically everyone operates a "mixed farm," situated no rmore than twenty kilometers from a town. The great majority Y. I H l e r: .I. . 9M“ 0» rel. Lil; ind PHI.“ t e E C IF I. l lit I. C f\ I a will CL I C r If.» a ~ 0 .fi 2 S Q~ t n. _ .. ml 1 ll; .hu :8 .sI» 136 of producers are members of an agricultural cooperative. Representatives from each division are found within a radius of. the towns or, more specifically, the cooperatives. With this knowledge it was decided to go first to the managers of the cooperatives to learn the particular characteristics of the area and to acquire introductions to several farmers in its radius of influence. The managers were usually extremely helpful, with the exception of two cases, and it was easy to meet one or two farmers in the retail store section of the COOperative.3 From them names of others were obtained. Often trips to the farm accompanied the interview and these trips were essential in finding some producers. There were a number of unsuccessful visits to farms which found the suggested candidate in town or in another area. If those living closest to town are more likely to be in the c00perative at any given time, there was a bias in this di- rection. However, it did not appear to be strong since the towns in the north are not difficult to visit for practically any producer. Once farmers in other divisions were suggested 2There are 13 agricultural cooperatives in the partido distributed as follows, Azopardo l, Bordenave 2, Darregueira 2, 17 de Agosto l, Felipe Sola l, LOpez Lecube l, Puan 2, San German 1, Villa Iris 2. They act as "middlemen" in the sale of products and also retailers of consumers goods for their members. About 95 per cent of the producers in the north are members of at least one cooperative. 3Both cooperatives with which there was trouble were in Bordenave. Consequently, it was necessary to find farmers Iby asking acquaintances from neighboring divisions for intro— Iductions. Fortunately, Bordenave is centrally located so that there was no problem in covering the divisions. '(1 LI‘ "1 f!“ (I) '(1 l) 137 as candidates to be interviewed this reason for bias no longer existed. After a person from each division surrounding a town was chosen another town was selected and the process re- peated. When first entering an area from which no producer had been questioned, two or three farmers were found per day for the interview of from forty-five minutes to two hours. When producers from specific divisions only were needed as many as two or three days were required to find a farmer to be interviewed. In the southern third of the partido the problem was different. There are large farms at distances of as much as sixty kilometers from town, which are sometimes impossible to reach in a small car. These farmers often raise cattle only and do not belong to a cooperative. (They can sell their animals at cattle auctions and buy supplies from "general stores" so that a cooperative is not necessary.) There are as few as one farmer per division so that the process of se— lection is less difficult, although locating the producer can be more time consuming. It was possible to meet some of the farmers from the areas which are inaccessible for a small car at cattle auctions, others at their homes in Bahia Blanca, and others after being transported by a farmer in a pick-up truck. With this variety of meeting places there was no particular locational bias since those living in the most 138 difficult-to-reach areas were found away from their farms. The introductions were facilitated by the manager of the cattle auction organization with whom most of the producers deal. The process was the same as in the north, after the initial presentations. Responses.--There were differences in responses be- tween divisions, but the little variation in conditions in any particular division did not lead to significantly diverse opinions on transportation. Anyone within a division can give a more or less representative account of problems so 'that there was less fear of biasing the sample with a par— ticular sample selection procedure. The most likely bias was that those interviewed were more intelligent than the average, but, if this was present, it did not harm the study. If there had been a method yielding less intelligent pro- ducers the communications problem might have negated the ad- vantage of more random selection. There were few problems in obtaining information, probably because of the use of personal introductions, the inoffensive order of the sections, and the selective use of the controversial topics. Because of the prevailing desire not to divulge information which could be used to check on income tax statements, and the presence of government agents Inaking assessments in a nearby area a problem could have arisen. Some obviously false responses concerning levels of 139 production and investments were received, but these pre- sented few difficulties in sections relevant to transpor- tation. At least one producer, however, traced a causal con— nection from better roads to more production to higher taxes and, consequently, was wary of answering whether more pro- duction would obtain with road improvements. Generally, when information was inaccurate it was not because of sus- picions, but, a desire to give ggmg answer rather than none. Only one person refused to answer questions because of un- certainty about motives for the questionnaire while several others expressed their unwillingness indirectly to the person who was to make the introduction. Their reasons included em— barrassment, lack of time, and doubts as to the ultimate use of their responses. Generally, the producers were helpful and rather than apprehensive were pleased to give tours of their farms and discuss agricultural and transport problems. The method used seemed to elicit adequate answers to the questionnaire, especially considering the limitations to which a foreigner is subject in conducting such a survey. The selection of producers and the questioning of each in the same manner were not done according to orthodox statisti- cal methods, however, there was little that was orthodox in the entire situation. The presence of a NOrth American in the country inquiring about farm problems probably elicited more unusual responses than would have been the case had the 140 interviewer been Argentine. In an area where the farmers are not accustomed to students or universities with interests in production problems it was difficult for them to under— stand why a Nbrth American had an interest in Argentina, in Puan, and, specifically in one particular farm. Also, the reactions could have varied because of the place at which the producer was interviewed. There is little similarity in meeting someone in his office in Bahia Blanca while dressed in coat and tie and "waving someone down" on horseback, clothed in dust, fifty kilometers fromia rural town. Even with the unique circumstances and pragmatic method employed there were not unexplained aberrations in opinions or devi- ations in the sample from expected distributions of land holdings, size of farms, and distances from railroads, paved highways and Bahia Blanca. Sample size distribution and location.--The distri- butions of farms by size are very similar for the sample and the population from which it.was drawn (see Table 7). In Puan 56.5 per cent of the farmers work 54.3 per cent of the land in plots of between 200 and 1,000 hectares. There are 54.4 per cent of the producers in the sample who farm land in plots of the same dimension. Hence, in this range of farm sizes, the sample provides an accurate approximation of the number of farms in the partido and the quantity of land which these farmers use. In a study of the relationship be- tween highway improvements and agricultural production it is 141 better for the sample to represent the proportion of land in a classification rather than the numbers of farmers working it. .If the products which must be transported are directly related to the number of hectares, as seems to be the case, the sample should represent the amount of land which farmers control rather than the percentage of the total number of farmers which the producers comprise. For those farms of less than 200 hectares, the 13.2 per cent of total farmers interviewed falls far short of the 38.4 per cent of all farmers in the partido, but is a reasonable approximation of the more meaningful 10.8 per cent of the land which they have under production. Farmers with over 1,000 hectares comprise only 5.7 per cent of the total in Puan, but these producers control 34.1 per cent of the land. The sample percentage of 32.3 is, once again, very near the latter figure. Table 7. Distribution of farms and producers in the sample and population in Puan. :===: Percentage of Percentage of Percentage of Size Category Farms in Farmers in Land in (hectares) Sample Population Categories Less than 200 13.2 38.4 10.8 200 to 1000 54.4 56.5 . 54.3 Over 1000 to 10,000 32.3 5.7 34.1 Source: Censo Nacional Agropecuario, 1960 (Buenos Aires: Direccion Nacional de Estodistica y Censos, 1960), p. 56 and Personally collected data. 142 Actually, the nature of the geographic division and sample selection procedures made impossible an approximation of the number of farms in each category of farm size. The partitioning of the partido resulted in a number of divisions with no farms with less than 1,000 hectares so that inherent within the process was a sample of greater than 5.7 per cent. Also, farmers with less than 150 hectares were not inter- viewed, since they were not presented either by cooperative managers or their friends. Both factors led to a poor ap— proximation of the numbers of farmers in the farm size classification. However, because the sample closely indi- cated the quantity of land farmed in each classification it was considered more suitable for drawing inferences. The only irregularity in the sample distribution of farms by size was the greater frequency of farms in the cate- gory of 1000—1499 and 2500-4999 than in adjacent categories (see Table 8). This is attributable to the government's system of land division in which land was apportioned in 10,000 hectare blocks and then subdivided into fourths and eighths. As a result, there are more farms with 2500 and 1250 hectares than with the uneven magnitude which surrounds them. 143 Table 8. Size of farms and type of land holding in sample drawn from the partido Puan. Hectares Farm WOrked by Farm WOrked by Number of Land Owner Land Renter(a) Farmers 0-199 6 3 9 200-399 14 9 23 400-599 ' 6 2 8 600-799 3 3 800—999 4 4 1000-1499 5 6 1500-1999 4 1 5 2000-2499 1 1 2500-4999 5 5 5000-7499 ’ 2 2 7500-10,000 2 2 (a) "Land renters" refers to both tenants and share- croppers. Some also own land. Source: Personally collected data. The land renters in the sample had smaller plots, as expected, with all but one under 600 hectares.4 The pro- portion of renters in the sample distribution, 22 per cent, was much lower than the 40-50 per cent in the population. 4"Land renters" is used as a general term for both tenants and sharecroppers. Some producers in this class also owned land. 144 This is explained by their predominance in divisions in the north from which one, only, could be chosen. This probably did not lead to any differences in the replies concerning marketing methods. However, if land owners innovate more rapidly, responses concerning expected changes in production could have indicated a greater responsiveness than is charac- teristic of the population. The distances between farms and paved highways, rail- road stations, and Bahia Blanca reveal no peculiarities since variations are controlled by the process by which the partido was divided and the sample chosen (see Table 9). Data con- cerning distances yielded less information than would be possible if all transport facilities were homogeneous since the number of kilometers is not as important as the quality of the road. A farmer living sixty kilometers from a paved road in the north can.be in a better position than one only thirty kilometers from pavement in the south. Perhaps more important than the distance from a paved road is the distance from a railroad station, which is synonymous with distance from a town (except in the case of San German). The sample figures showed most farmers within easy access of railroads so that the marketing of those goods which are sent by rail- way require little road transport. The nearness of the rail- road stations, relative to paved highways, demonstrated the possibleopportunity for railroads to gain a share of the trucker's market. The distances from Bahia Blanca were 145 diverse, with the greater number of farms between 110 and 130 kilometers resulting from the elongated shape of the partido. In all cases, the time and cost required for trans- portation is more pertinent than the number of kilometers. The relationship between them, while direct, is not always proportional and this must be considered when inferences are made. Table 9. Distances of farms from a paved highway, a rail- road station, and Bahia Blanca in sample drawn from the partido Puan. =============- 1::, .J================ Distance Distance Distance Kilometers P532d Railigad Kilometers BahigrgTanca Road Station 0-5 7 17 70-79 2 6-11 3 12 80-89 0 12-17 8 8 90—99 6 18-23 10 10 100-109 7 24—29 4 3 110-119 12 30-35 16 11 120-129 11 36-41 6 3 130-139 6 42-47 5 2 140—149 3 48-53 4 150-159 4 54—59 .2 1 160-169 4 60—65 2 170-179 9 66—71 1 1 180-189 2 190—200 2 Source: Personally collected data. 146 Changes in Production.—-The sections of the question- naire which are relevant to increasing agricultural pro- duction by improving roads were analyzed with respect to the sizes and tenancy of the farms in the sample and their dis- tances from a paved highway, a railroad station, and Bahia Blanca. It was then seen if differences in responses were related to any of these factors. An important means by which highway improvements can lead to increases in agricultural production is by facili— tating the sale of products which are now marketed. In some zones of the country poor transportation is responsible for higher costs and physical losses and, consequently, lower production than would be possible. .In Puan this is most easily caused by inclement weather and/or poor roads which make difficult and expensive the hauling of goods. The farmers were asked, "Could you sell more of what you produce with allwweather roads?" so that the strength of this factor could be determined (see Table 10).5 The responses did not 5The term all-weather roads, was accepted to mean paved national highways and improvements of all other roads to a degree that permits driving on them all year. It is not likely that many local roads will be improved in the foreseeable future, but this was not considered important in asking the questions. With the hypothesized improvements it was possible to see if roads on any level are considered limitations on production. The usual response to this question was "yes," but it was not recorded as affirmative unless the producer could say how or in what manner more could be sold. The belief that roads are important led to many "yes" answers, but these were changed to "nos" on second thought or when description 147 Table 10. Could you sell more of what you produce with all- weather roads? Farmers in Farmers Replying Hectares Category Affirmatively Less than 200 9 0 200 - 499 28 2 500 - 999 10 1 1000 - 1999 11 2 2000 - 10,000 10 2 Land Renters 15 0 Kilometers from Paved Road Less than 20 18 3 20 — 39 31 l 40 and over 19 3 Kilometers from Railroad Less than 10 22 5 10 — 19 16 l 20 and over 30 1 Kilometers from Bahia Blanca Less than 100 8 l 100 - 139 37 2 140 and over 23 4 Source: Personally collected data. 148 indicate that roads act as a significant limitation on the quantity of products sold. Only seven of sixty—eight re- spondents believed that road improvements could lead to changes in sales. One of these seven foresaw a negative ef- fect because better roads would increase competition and, consequently, lower prices. The other six believed that profits would be greater since it would be easier to send cattle to the markets in Bahia Blanca or Buenos Aires where there are higher prices. It is interesting that no one sug— gested that more cattle could be sold, but only that higher prices would be received for the same production. Also, no one expected changes in either the volume of sales or the prices of crOps. It is difficult to generalize from the small number of farmers who expect changes and to show re- lationships between their expectations and size, land holding, and distance factors. It is perhaps significant, however, that no land renter anticipated greater sales, that those producers expecting to sell cattle at higher prices were farmers on generally larger plots, that four of the seven lived in the category of farmers most distant from Bahia Blanca, and that five of seven lived within ten kilometers of a train station. of what would be done differently was required. The later questions received fewer immediate affirmative replies since it was known that an answer had to be given to an ensuing "how?" or "why?" This could lead to a bias if people did not want to explain answers but was considered necessary be- cause of the tendency to reply affirmatively with no factual bias. 149 These relationships conform to characteristics of the area. Land renters are frequently more concerned with crops than cattle and no crop producers expected benefits. It is usually the larger farmers who send cattle to more dis- tant markets since they are capable of filling a truck with their own stock and speculating on prices. The other re- lationships stem from the nature of cattle shipments. The desire to send to more distant markets by those living near railroad stations indicates that trains are not used for hauling cattle, as is the case. As expected, those living farthest from Bahia Blanca could benefit most in shipping cattle as poor roads present a relatively greater problem. Although it appears that roads do not strongly in- hibit the sales of products, road improvements can still have an appreciable effect on the level of production. This can be conveyed either by new opportunities or releasing re- sources which can be used more productively. The producers were asked, "Could (would) you produce more with all-weather roads?" to examine the strength of the stimulus of road con— struction (see Table 11). The question referred to both in— creases in output of the goods presently produced and the introduction of new products. It was expected that answers to this question would be over—optimistic because of the general faith in roads as a crucial element in marketing. However, only fourteen of sixty-eight replied affirmatively. This is important evidence 150 Table 11. Could you produce more with all-weather roads? m Farmers in Farmers Replying Hectares Category Affirmatively Less than 200 9 l 200 - 499 28 6 500 - 999 10 l 1000 - 1999 ll 3 2000 - 10,000 10 3 Land Renters 15 3 Kilometers from Paved Road Less than 20 18 2 20-39 31 6 40 and over 19 6 Kilometers from Railroad Less than 10 22 2 10 - 19 16 5 20 and over 30 7 .Kilometers from:Bahinglanca Less than 100 8 2 100 - 139 37 4 140 and over 23 8 Source: Personally collected data. 151 that producers think that they are now producing all that they care to market and, in combination with the answers to the previous question, is evidence that all that is produced is sold. It is noteworthy that four of the fourteen were from the south (divisions 61,63,64,68) and were inhibited by poor local roads, so that a road construction program might not alleviate their problems. In each of these cases the poor roads (or lack of roads) prevented the profitable planting of wheat in which the farmers indicated an interest. If more of the area could be "opened-up" perhaps other farmers would find it feasible to plant wheat, but this is more a problem of new road construction than road improvement. Of the other ten producers, six felt that new types of products such as chickens, pigs, vegetables and milk could be produced and sold at more distant markets. The re- maining four farmers foresaw the planting of more hectares of wheat if roads were improved. No one had a good idea of increases in production. Estimates ranged from 10 to 100 per cent.6 6One of the two who foresaw a 100 per cent increase in production said that he would not change techniques or products himself, but that others would. He was against altering his methods or product-mix because the land origin— ally belonged to his mother-inflaw and he thought that it would bother her if he initiated changes. It is not ex- pected that the "mother-in—law effect" is strong in the zone, but such non-economic factors are probably more important than is the case in more developed economies. 152 The failure of more farmers to anticipate greater production is likely attributable to the geographic limi- tation of the area within which a farmer has little land on which to introduce new products and usually must be content with shifting between cattle and crop production. In all, eight farmers indicated that better roads would lead to more crops since it would be easier to transport the harvest. No one mentioned producing more cattle so roads evidently do not limit livestock production, although, as was seen pre— viously, they do limit the markets to which animals can be sent. Even if there is a shift from cattle to crops, an in— crease in production is not certain since cattle, perhaps, were originally produced more efficiently. If a producer changes from less than Optimal cattle ranching to less than optimal wheat farming, it is difficult to estimate the net gain or loss in production.‘. The distance factor seems to be important as there appeared to be more farmers than would be expected in the categories with producers most distant from paved roads, railway stations, and Bahia Blanca. Many of those who de- sired to produce new goods or shift their product composition were limited by the lack of local roads so that the situ— ation would not improve even with a construction program on the national and provincial level. There is no doubt that transportation costs would be reduced by road improvements, but how much this reduction 153 would benefit farmers is debatable, because of the price structure of the transportation industry. The farmers are not considered to be good judges of the magnitude of the benefits which they will receive, but their opinions have important implications. In response to the question "Could you reduce your transportation costs with all-weather roads?" twenty-five farmers, or 37 per cent, replied negatively (see .Table 12). This was prompted by either a lack of problems now or a belief that the trucking companies would receive the benefits of road improvements. Most of them foresaw more rapid transport and better service, but believed that they would not be reflected in lower costs. (It would be re- flected in less damage to goods and time savings, but these factors were not considered to be of prime importance, as they do not now impose serious problems.) Those that anticipated cost decreases estimated their magnitude, but little confidence can be had in their accuracy since accounting for costs is rare. Even if the range of cost reductions were accepted as accurate (it ap- peared to be over-optimistic) the reductions in costs of pro— duction and marketing would only be on the order of 3 or 4 per cent at the highest. ‘ The types of benefits suggested were lower extra- official truck tariffs because of greater trucking capacity, smaller weight losses for cattle, the opportunity to purchase trucks to be operated privately, direct shipments to Bahia 154 Table 12. Could you reduce your transportation costs with all-weather roads? m Cost Reduction Hectares Less Than 10- 20- 30— 40— 50 and 0 10 19 29 39 49 over Less than 200 2 3 2 2 0 0 0 200—499 11 l 7 5 l 0 3 500-999 4 3 2 0 0 l 0 1000-1999 3 l 3 2 0 0 0 2000-10,000 5 l l 0 2 l 0 Land Renters 3 6 3 2 0 0 1 Kilometers from Paved Highway Less than 20 8 l 4 3 l l 0 20-39 8 5 ll 3 3 O l 40-and over 9 3 0 3 l l 2 Kilometers from Railroad Less than 10 10 2 3 3 l l 2 10-19 6 3 4 2 0 0 l 20 and over 9 4 8 4 4 l 0 Kilometers from ‘Bahia Blanca Less than 100 3 2 1 l 1 0 0 100—139 14 5 8 4 2 2 2 140 and over 8 2 6 4 2 0 l Source: Personally collected data. 155 Blanca, and greater ease in farm administration. Some ex- pected gains to accrue to other producers because of a more sophisticated tranSport and marketing network, but antici- pated few personal advantages. When this question is viewed in relation to the first two concerning the increase in pro- duction and sales it appears that farmers will earn more but enjoy no increase in the quantity of products marketed. Without exception the sixty-eight farmers responded that profits were used for farm improvements, so it follows that gains from transportation will be used to increase commodi- ties for on-farm production or consumption. Since most ex- pect no increase in production, the implication is that con- sumption will rise.7 There is no apparent pattern in the relationship be- tween cost reductions and distances from paved highways, rail- road stations and Bahia Blanca. This can be attributed, par— tially to a lack of familiarity with costs and to what extent they can be reduced. Also, it is perhaps indicative of the Ivarying effect of distances on costs or, in other words, that particular problems with particular roads are more im- portant than distance per se. 7Certainly all profits are not used for farm improve— ments as can be verified by the homes which some possess in Bahia Blanca. It is common to declare that all expenditures are on farm improvements to avoid taxes. Also, it appears that more gains would be used to increase production than is generally anticipated. 156 The widespread failure to affirm that there are possibilities to increase production and sales, even with ex- pected cost reductions, could substantiate the contention that the producers do not believe that they lack modern methods. Alternatively, it might imply that the producers consider any improvements too expensive to be offset with gains from cost reductions, e.g., heavy machinery. Either of these beliefs makes agricultural extension work difficult since a producer cannot be convinced that a change in his techniques is desirable if he believes that he uses the best available and that he could be aided only by the application of costly innovations. Only sixteen of sixty-eight producers (less than one fourth) affirmed that they would change production methods if roads were improved (see Table 13). Perhaps the failure of more producers to anticipate changes was because road im- provements in the area would not have a strong effect on pro duction or because it is thought that there are no available methods which are utilized.8 The changes in methods in ten of the cases were not in farming techniques, but, rather, shipping more by truck to Bahia Blanca. The remaining six believed that more modern techniques and more machines would 8Oddly enough, there was a recurrent opinion in the interviews that road improvements would not benefit the inter— viewee personally, but sizable benefits would accrue to others and that the interviewee used the most modern methods, but that other producers did not. 157 Table 13. (a) WOuld you change your methods if more high— ways were improved? (b) WOuld there be more changes in more time? == _==L ; =L Hectares Farmers in Category A B Less than 200 9 3 2 200-499 28 8 14 600-999 10 2 2 1000-1999 11 o 1 2000-10,000 10 3 0 Land Renters 15 4 7 _Kilometers from Paved Roads Less than 20 18 3 5 20—39 31 8 8 40 and over 19 5 6 Kilometers from Railroad Less than 10 22 8 6 10-19 16 3 6 20 and over 30 S 7 Kilometers from IBahia_Blanca Less than 100 8 0 2 100-139 37 9 9 140 and over 23 7 8 Source: Personally collected data. 158 follow from road improvements. The failure of many to fore- see changes stems from the fact that a number of farmers do not need improved roads for marketing their production. Truck drivers are able to reach the farms and the products can be sold in the towns a short distance away. Poor roads are an inconvenience, but not a costly one. It is likely that some changes in production methods will require a longer period of time to be initiated. How— ever, only nineteen of sixty—eight felt that more changes in methods would occur over time as a result of road con- struction (see Table 13). Furthermore, not all the respon- dents believed that the results would be favorable. Some producers on smaller farms thought that transportation im- provements would enable more people to live in larger towns or cities and lead to the vanishing of the small towns and the close source of supplies which they provide. The general belief was that social effects of road building would be far- reaching and that these would somehow lead to the application of improved techniques. Neither the specific techniques nor the mechanism by which the application would be conveyed were mentioned. Those producers with farms closest to Bahia Blanca anticipated no changes in techniques even after a lapse of time so that benefits, in whatever manner they are transferred, perhaps will be greater in the more rural zones. It was not~expected that the responses relevant-to pave ing Route 35 would show predicted increases in produgtion since 159 questions concerning improvements in highways in general did not result in expectations of production changes. The answers of the producers, however, yielded some interesting relationships. The producers were asked, "What would you do differently if the 44 kilometers of Route 35 between San German and La Pampa were paved?" and "What did you do differ- ently after the section of Route 35 between San German and Nueva Roma was paved?"9 (See Maps 7 and 8.) With respect to the section between San German and La Pampa forty of sixty-eight persons expected no production changes. These forty were, with a few exceptions, situated in the northern or southern extremities of the partido or had farms very close to Route 35. In the north and south there were no plans to take advantage of the new pavement while those near the road felt that the road already allowed adequate trans— port. The farmers who had highest hOpes for better con— ditions were those living from five to fifty kilometers from the highway who believed that diverted traffic and more con- venience would follow its paving. Only four of these pro- . I 10 ducers, however, foresaw production increases. 9The section between Nueva Roma and San German is the middle of the three between Bahia Blanca and La Pampa. The paving was completed in 1964. 10Increases in conveniences and diverted traffic could also lead to small increases in production if they resulted in lower costs. These responses are grouped separately, how- ever, since the farmers did not anticipate that they would significantly affect the quantity of goods produced. 160 MAP 7 Responses of Farmers Interviewed to the Question,“What Would You Do Differently if the 44 Kilometers of Route 35 Between San German and La Pampa were paved ?" Responses Indicating Expectations of: D No Production Change increase in Production (hilt), Increase in Convenience E Traffic Diverted to Route 35 @111 Other Effects m 1.0 In. 161 MAPS Responses of Farmers Interviewed to the Question, “What Did You Do Differently After the Section of Route 35 Between San German and Nueva Roma was paved ?" Responses Indicated: [:I No Change In Production Increased Production :7; Increased Conveniences I“ ll'lllll ll Traffic Diverted to Route 35 Rf? Other Effects ,Jem 162 The expectations accompanying the prospective pave- ment can be checked against responses concerning the paved section between San German and Nueva Roma. In this case, al— so, there were negligible effects in the northern and southern extremes. NOt many of the producers near the road were interviewed since most of the section is not in Puan, but those who were within about twenty kilometers of the section felt that they received benefits from the construction. Probably, as some indicated; those between twenty and fifty kilometers do not receive the benefits that they expect with- out simultaneous improvements in "feeder roads." The number of producers who can reach the pavement depends on the quali- ty of "secondary" roads in any case, but, generally it ap— pears that better conditions will accrue mostly to those producers located between, perhaps, five and twenty-five kilometers from the new construction. It is interesting that more producers believed that production was increased and conveniences were more abundant after the pavement of the middle section than anticipated production increases fol— lowing the improvement of that portion of the highway between San German and La Pampa. This is peculiar because there are more chances for diverted traffic in the section which is un- paved at present. Possibly, it indicates that there will be greater increases in production than the producers expected, But the increases would not seem to be much greater since forty-five producers, rather than forty, as in the case of 163 the now unpaved section, believed that the pavement had no production stimulating effect. The general opinion seemed to be that roads are de— sirable and it is expected that they will have an appreciable effect on the economy, but that this effect will not be through increased agricultural production. With agriculture accounting for 75 per cent of the partido's output, and services to people in this sector comprising a large share of remaining product, it is difficult to conceive of another manner. There are long run improvements possible, but these cannot be expected to be great according to the earlier re— sponses of the producers in reference to changes over time. Other influences on production.—-It must be re- emphasized that these are only opinions of producers and, while important, they are not the determining factors in pro— duction. Those farmers who did not foresee production in- creases might find their expectations change while those who aspired to produce or sell more with improved roads might find their actions hindered by an unanticipated factor. Changes by the government or within the agricultural sector could facilitate innovations or the dissemination of more ad— 'vanced techniques which would enhance the farmer's position and enable him to gain greater benefits from roads. The relative improvements of truck and railway transportation Ican have a bearing on gains by farmers as well. Furthermore, 164 a new law encouraging competition in trucker's tariffs could encourage the passing of savings from the transportation to the agricultural sector. Although a number of theoretical possibilities exist, no major changes are expected. The most conspicuous improvement attributable to the scale of operations in recent years is the wheat unloading facility for trucks at the port at Bahia Blanca. Since 1961 trucks have carried approximately one-half the wheat which has reached the port and this encouraged plans for the con- struction of the machine, which is now in progress. This de— velopment can be attributed to increases in trucking, but not necessarily to highway improvements, since two of three road sections nearest Bahia Blanca were unimproved until the paving of one in 1964 and no greater percentage of the wheat crop has been hauled by truck after this date. The crops have been larger, though, and the increased number of trucks has led to a more urgent need for the facility. There are not other readily apparent increases in the scale of operations which could benefit agriculture. Undoubtedly, the south could benefit by road build- ing and road improvements. These could enable the profitable production of wheat and the direct shipment of cattle from the ranch rather than from a more distant loading point. The increase in grain production could be considerable, but it is doubtful that it would be accompanied by lower unit costs. The lands are less suitable for production than in 165 the north and, even with better roads, transportation costs probably would be relatively higher. The fields must be cleared of forests and underbrush and because of the cost of doing so the increased production would most likely be achieved with a smaller profit margin than in the north. The transportation costs for cattle would not be radically effected. Animals lose little weight walking from a farm to a truck loading point. _Afterwards, the greatest weight.losses occur in the first hours of their trip to market. Hence, regardless of the point of departure the weight losses are about the same. “Any savings accruing to the producer would be in time and convenience and the al- ternative cost of the labor utilized in the movement of cattle—~none of which is large. This is an "opening—up" problem, to an extent, and such a project in this area is more capable of increasing the production of that product already produced, cattle, than of a product to.be introduced, such as wheat. There is no ad- ditional expenditure for ranching, but the costs of preparing the land and the initial investment in cultivating machinery can be sizable. It is possible that highway improvements would lead to the encouragement of a number of relatively less efficient or high cost wheat producers. The increased production of crOps and cattle in which some producers indicated an interest is not certain. 166 When previously unexploited land is brought into production, output will increase. This will be at a higher cost per unit than currently produced goods, but will presumably pro- vide a reasonable return on investment if it is undertaken. The quantity of new production is uncertain since the re- latively high costs of procuring initial capital are pro— hibitive for many of the farmers in the area. When land used for cattle is transferred to wheat the effects on total product are unknown. The relative price structure which prompts changes in output composition is complicated. The price of wheat is set by international forces until it falls below a nationally sustained level, but in either case it is determined by forces external to the farmers in Puan. During harvest time, when a large quantity of wheat is marketed, the price is usually at the sustained level. At other times it is bid up as much as 30 per cent higher. The prices for cattle fluctuate all year depending on many factors. Production decisions are based on relative prices, but the decisions can be very different depending on when they are made. Changes in product compo- sition are sometimes made on the basis of a speculative price for wheat. If the rainfall fails to reward the de- cision, a loss in product can arise. These losses cannot be immediately recovered, since wheat usually cannot be grown on the same land in successive years. Most farmers use half of their land for wheat and half for cattle to avoid such 167 problems. Changes in product composition, because of their uncertain results, occur only after persistent price differentials. Those producers with plans to take advantage of the opportunities to sell cattle at more distant markets will probably find more difficulties than anticipated. There are price differentials between rural auctions and Buenos Aires .and Bahia Blanca, but these are based primarily on transpor— tation costs. The volatile market sometimes produces ap- preciable differences in profit margins and alert cattle dealers take advantage of them. This entails volume sales and speculation. Better highways would permit more specu- lators to operate and the greater quantity of cattle sup- plied in the urban markets would surely reduce the price differential. The producers in Puan could reduce their transportation costs and would receive a relative advantage over other areas which do not have paved roads. Their savings would likely be larger than the slight price decrease which the greater quantity supplied would precipitate. The introduction of new products, in which a few pro— ducers indicated an interest, would be more difficult than they think. Some believed that improved roads would enable such products as chickens, eggs, and milk to reach a steady market in Bahia Blanca. Even if there were all-weather roads, though, there would be problems in disposing of the products once they reached the city according to the 168 wholesale distributors in Bahia Blanca. When shortages do arise they can be alleviated by suppliers at points closer to Bahia Blanca than Puan. The few producers that indicated an interest in diversifying production could probably do so without affecting the market and would profit if the trans- portation costs were not prohibitive. However, it is doubt- ful that large scale production would find a market. If techniques are assumed to be equal, it is sure that the cost per unit would be higher in Puan than in areas closer to Bahia Blanca, because of the greater transportation input. In the short run, the introduction of new products is not probable, both because of limited demand and the general inertia of production. Roads do not now present overpowering limitations on new products and highway improve- ments would probably not alter any market enough to make a new product much more profitable. (Many do not produce all that is possible with adequate roads, at present, so it is not likely that more would be done with road improvements. More could be produced if roads were clearly an inhibiting factor but this is rarely the case. These resources that are released by highway improvements are consumed by a number of factors, including leisure, so that their effect on pro- duction need not be significant. This is emphasized when the rate of inflation does not permit an understanding of whether gains are real or monetary. Even if they are known to be real, anticipated higher costs can cause a slow adoption of new techniques and new products. 169 The likelihood of long run social effects increasing agricultural production is debatable. There is a belief that the increased mobility and association with the urban community which improved roads foster would provide some type of "spillover effect," but the mechanism for this is not known. Certainly, agricultural extension work and farm ad- ministration could be facilitated, but even now roads pre- sent more of an inconvenience than an impossible situation. If, as some believe, the destruction of small towns will ac— company road construction the calculation of benefits and their comparison with the costs to those who suffer from the reorganization would be impractical. The social effects of road improvements are not a part of this study and are relevant only as they increase agricultural production. With the existing difficulties in quantifying social benefits the estimation of their effects on agricultural production is even a more remote possibility. It is not likely that the effects will be great in the re- latively near future since there is not an attitude of change among the producers. If road construction cannot be justified on economic efficiency grounds and it is doubtful that it can, then it must be improved on some other basis or not at all. The total cost of the highway improvements is not relevant to this study since there is not a meaningful esti- mation of total benefits with which to compare it. Even if 170 an approximation of benefits were available (this would en- tail a number of assumptions about who gains and loses--and over what period of time--from the construction of forty—four kilometers of national highway and the improvement of pro- vincial roads) a conclusion concerning the profitability of the road project is limited by the conceptual problems in measuring costs. Assumptions must be made about traffic flows and road conditiOns over time and in both cases ac- curacy is difficult to achieve. .If it is assumed that the traffic flow and road conditions will remain the same, as is often done, the common tendency of increasing traffic and de— teriorating roads are ignored. There is not an easy way to resolve the problem. The financial costs of construction are obtainable but they are not the most desirable figures since the real cost to the economy is the alternative to which the funds could be put. The common assumption of a 6 or 8 per cent rate of interest as an opportunity cost is no more than an easy way to avoid the problem. The opportunity cost of the money for highway construction in Puan is a hypo— thetical use of funds for improving a national or provincial highway in another area. Post-construction studies of road profitability have not been attempted and, consequently, the actual benefits from most roads are unknown. Investments in road improve- ments could be immensely productive, provided a 6-8 per cent return, or produce very small returns if, for instance, the 171 new road caused the people in several small towns to disband and forced the discontinuation of competing rail services to an extent that made some people worse off. Any attempt to arrive at a specific percentage is a study in itself. While it provides no solution to the problem, a study showing the effects of highway improvements on agricultural production allows educated guesses about the profitability of road construction. It has been shown in Chapter IV that the cost re- ductions to producers arising from improvements in highways in Puan would not be greater than about 2 per cent and that there are few obstacles which improved roads would help to overcome. Consequently, the immediate effects on the quanti- ty of production marketed are not great. In terms of "pay- ments in kind" which must no longer be made for transpor- tation services, the increase in the production marketed would be equivalent to the reduction in transport costs. This, however, would be a cost reduction for producers only if the trucking enterprises pass on the gains arising from better road conditions—-something which cannot be relied upon. If it is assumed that all cost reductions are passed on to the agricultural sector, some production increases can be realized. New products or larger quantities of present products could result from new inputs or new combinations of inputs. The cost reductions, though, are not of a magnitude which permit large increases in output. Even if they were, 172 the attitudes of the producers indicate that few changes in output are anticipated. Without the belief that greater pro- duction can be attained and the desire to produce more, cost reductions arising from an increase in the supply of trans- portation can be expected to have only minimal effects. Consequently, road improvements in Puan would not have a large effect on agricultural production and, as a result, cannot be expected to have a significant impact on the economy. CHAPTER VI BAHIA BLANCA-SANTA ROSA REGION It has been shown that the improvement of Route 35 and its adjoining "feeder roads" cannot be expected to have a strong effect on agricultural production in Puan. IA sub- stantial increase surely cannot be obtained with the present production and transport environments. Even if the circum— stances in the partido were ideal for utilizing new oppor- tunities, it is improbable that production could be raised substantially by means of road improvements. These results, however, are not directly applicable to the region between Bahia Blanca and Santa Rosa. The conclusions reached in Chapters IV and V must be modified since the factors which make Puan suitable for specific study also make unique the interaction between its transportation and agricultural sectors. Puan was chosen because the unpaved portion of Route 35 is within its boundaries. Conveniently the hetero— geneous physiographic features which are present make it very representative of diverse conditions in other parts of the region. Its disparate road qualities and soil types and varying quantities of rainfall permit the study of a wide variety of relationships between agricultural production and 173 174 transportation. The production methods and approaches to problem solving are similar throughout the area, but the problems to be solved in Puan are not precisely the same as those in other partidos or departmentgs. In some cases differences could lead to larger gains in production and in others smaller. The factors which would permit or promote greater increases in production or prevent those factors which are present in Puan from functioning are considered so that more general comments can be made. Effects on highway improvements.--In generalizing from the results in a partido to a broader region it must be remembered that every governmental unit has a unique size and location. Puan was the best partido for specific study, but its location and elongated shape allow producers a greater number and type of transportation alternatives than are present in other areas. In the northern extremes of the partido there are problems with easily muddied brunizen .soils, while in the south there are practically impassable roads of low quality. These conditions make it difficult to reach Route 35 and would prevent the producers in the zone from receiving all possible benefits from the paving of the high- way. It is not necessary for a number of farmers to use Route 35, though, since Route 33 in the north and Route 22 in the south provide access to Bahia Blanca. In the central portion of the partido the unpaved part of Route 35 presents only a small problem since provincial roads enable many 175 producers to by-pass some or all of the highway.' Some people do not use the unpaved section of the route because pro— vincial roads are of equal quality and are closer to Bahia Blanca. Part of this traffic would certainly be diverted, if the section were paved, with the quantity depending on the differences in distances totBahia Blanca over the dirt and paved routes. If many extra kilometers had to be driven to arrive at the pavement, it is doubtful that it would be utilized by those who had the choice, since the dirt roads are adequate. The producers living in areas bordering Route 35, nearest Bahia Blanca would be affected variously by the paving in Puan. The effects would be diverse, but probably small and insignificant in increasing agricultural production. The most likely are as follows: (1) The newly paved section would be of little importance since the people already travel on paved highways and have the alternatives of using Routes 33 and 22. (2) There would probably be more traffic following the road improvement and this usually makes trucking services easier for producers to obtain. But, increased movement would deteriorate highways more rapidly so that any benefits would be at least partially offset. If the trucking industry did not expand, the increased demand for trucks in Puan could eventually lead to a higher price for their services and, consequently, higher costs for farmers nearest Bahia Blanca. It is more likely, though, that the quantity of trucks would 176 increase or, at least, that the same trucks could be used for more time so that the capacity to ship products would be greater. There are not now problems in obtaining trucks and none of these factors would be expected to appreciably alter this situation. (3) The farmers would have easier access to the west for attending cattle auctions or purchasing supplies, but there are now no great problems in these respects. (4) Most of the producers and all of the towns are located off the main road so that improvements in principal routes would have weaker effects. (5) In the long run, it is possible that economies of scale in the marketing of cattle and sheep would arise. If an increase in the quantity of goods sent by truck were to lead to better processing facilities, the producers near Bahia Blanca would benefit. There are no major innovations foreseen, however, (with the exception of the truck unloading facility which is in the construction process) and even if there were it would be difficult to esti— mate the portion which is attributable to road improvements. Since there are no salient existing problems in marketing and no prospects for changing this situation, the paving in Puan is not important to producers in this area. The producers in the departamentos of La Pampa view the unpaved portion of Route 35 differently than the farmers in Puan or closer to Bahia Blanca. For them, the section is forty-four kilometers of dirt which cannot be easily by— passed, in an otherwise paved national highway. At the 177 border of La Pampa the section constitutes one-third of the distance to the port while at Santa Rosa it is less than one- seventh of the journey. Its share of the total distance be— comes less significant when it is considered that "feeder roads" must be used to arrive at the highway. Paving the section in Puan would not lead to large reductions in trans- portation costs, but travelling would be easier than pre- viously during periods of heavy rainfall.1 Traffic is not frequently stopped by rainfall, but impassable roads can be costly and inconvenient when they occur. When the weather is inclement in Puan, it is often equally so in the areas surrounding Route 35 in La Pampa. Consequently, when con- ditions are poor, truck drivers do not begin journeys to Bahia Blanca since they must start from towns connected to Route 35 by dirt "feeder roads." If there are problems with rains, they are usually general enough so that both "feeder roads" and Route 35 will not be used. If there are no problems, then the cost difference between driving on these forty-four kilometers of dirt and a paved road are not great enough to result in the changing of many decisions. Driving problems arise primarily when rainfall is irregularly 1The cost reductions, following the American Associ- ation of State Highway Official's figures modified for Argen- tina used in Chapter IV, would be about 20 per cent for the one section. If this were one—fourth of the entire journey it would represent a saving of 5 per cent of total transpor- tation costs. This is relatively small since transportation costs are not more than 10 per cent of agricultural pro- duction and marketing costs. 178 distributed and these occasions are infrequent.2 Production differences.--The differences in production between Puan and other areas within the Bahia Blanca-Santa Rosa region are relevant to particular products. In the marketing of wheat there are opportunities which are open to producers in Puan and not available to farmers in La Pampa. Within about ninety or 100 kilometers of Bahia Blanca it is profitable to send wheat to market in trucks hired personally. The differential in truck and train tariffs is usually less than the cost of the loading—unloading process which is necessary when wheat is sent to a marketing organization in town. If the section were paved, more people in Puan could avoid sales to intermediaries and deal directly with buyers in Bahia Blanca. Many producers are willing to send wheat by truck even when the rates are higher--choosing to pay more for the saving of time, added convenience, and security. In La Pampa, after road improvements, it would still be more profitable to send grain by train, but the relatively more attractive alternative of highway shipments would likely divert some traffic. This is especially important when a 2Products which are shipped from the provinces of Cordoba and Mendoza can be "tied-up" when they enter the area from farther north. Freight from these areas is practically always industrial goods and is not of interest in this study. It is conceivable that fruits or grains could be sent from these points to Bahia Blanca, but, at present, Buenos Aires is as close and has better facilities with which to handle them. Diverted traffic would require improved facilities as well as improved roads. 179 shortage of freight cars makes it necessary to haul more by_ truck. Some of the farmers in La Pampa, to the south of Route 35, would probably take advantage of the improved road since railway stations are, for them, more distant. The greater convenience and security could cause a shift in I traffic from railways to roads. The possibilities of diverted traffic would be even greater if there were competition among truck drivers and less than the official rate were collected, as in some parts of Puan. Generally, the wheat traffic in La Pampa would be expected to continue as normal since the above possibilities are applicable only in marginal cases. Most of the benefits from traffic diversion would accrue to producers in Puan. When the wheat crop in the vicinity of the province of Cordoba is inadequate to supply the flour mills located there, the millers rely on wheat from the Bahia Blanca-Santa Rosa region. Much of this is sent by truck. Some producers in Puan and closer to Bahia Blanca could profit by contracts with millers if Route 35 were paved, although the quantity of wheat sent is not large or consistent from year to year. At such times the millers offer higher prices than those of the towns or the port so that any factor which aids the ship- ments to the north would not only reduce transport costs, (assuming that wheat was to be sent to Cordoba anyway), but assist in making sales at higher prices as well. 180 The immediate effects of improving Route 35 on live- stock marketing would be stronger in Puan than in other areas since almost all animals in the partido are hauled by truck. Bruising and/or weight losses of cattle and sheep are not ap- preciably different on dirt and paved roads and rainfall is usually not an important obstacle. Therefore, gains to pro- ducers depend primarily on the decisions of the six trucking enterprises which haul livestock in the zone. The savings would have to be transferred at the time when the enter- prises jointly set their rates, which are uniform throughout the region. The reduction in tariffs (or, more realistically, the smaller increase), would not be large since cost re- ductions arising from the use of forty-four newly paved kilometers are not great. More benefits could accrue to some producers in Puan and those in other areas who are enabled to send livestock directly to the market in Bahia Blanca rather than sell at local auctions. The improvement of Route 35 would not alter the decisions of many producers since there would be no difference in the cost of the haul. At times, however, the higher prices in Bahia Blanca more than compensate for the transportation payments from the town and those farmers with easy access to Bahia Blanca realize the better sales oppor- tunities. These profits would decline as more producers took advantage of the price differences and increased the quantity supplied, so that after the improvement of the road system the difference might no longer exist. 181 In a few cases cattle traffic from La Pampa which now goes to Buenos Aires by railroad or by truck could be sent to Bahia Blanca if roads were improved. Some producers in Puan indicated an interest in sending more livestock to Buenos Aires by truck, upon the completion of Route 35, so that revenue might be increased by altering shipments in this manner as well. When benefits could be gained they would be, in the majority of instances, through personal shipments of livestock to take advantage of higher prices in previously untapped markets, rather than cost reductions from improved roads. One of the reasons that benefits from road COD? struction near Bahia Blanca would not be greater is the dominance of the markets in Buenos Aires. Highways are im- portant only as they relate to the points which they connect. In respect to Route 35 the effectiveness of road improvements is limited by the marketing facilities in Bahia Blanca. If the agricultural marketing capacity in Bahia Blanca were in- creased, then the city would exert a stronger influence on the area. At present, farmers are content to sell to inter- mediaries or at local markets because of a road system which makes difficult profitable shipments to more distant markets. If roads were improved so that access were gained to Bahia Blanca the farmer's position would be enhanced. If the pro— ducer gains access to both Bahia Blanca and Buenos Aires, how- ever, the latter city is often chosen so that highway 182 construction would have fewer favorable effects than would be possible if Bahia Blanca had comparable facilities. As in Puan those farmers near the roads and farther away than twenty or twenty-five kilometers would probably receive few benefits from the paving of Route 35. If a "feeder road" construction program were completed, the magnitude of bene- fits received would be limited by the deficient facilities in Bahia Blanca. The producers would be no worse off with road improvements, but they would not be as well off as would be possible with the existence of more cooperating factors. When savings are made possible by road construction the uncompetitive trucking industry prevents their reaching the producers. The fixed rates for carrying wheat are often not followed, but the companies which haul cattle conform to the mutually agreeable tariff for the region. Road improve- ments, then, provide direct financial savings to trucking companies (and to wheat producers when unofficial rates are charged), but less direct savings in time and security for the farmers. A more competitive trucking industry would en- sure more gains for the producers. Even if all the gains from road improvements were passed on, however, it is not likely that great changes would take place. There is not a dynamic spirit which is prevented from functioning because of limitations imposed by transpor- tation and there are no impressive possibilities to be made available by road improvements. Consequently, the small 183 quantity of released resources or new opportunities cannot be eXpected to result in substantial gains in production.3 The changes in agricultural production in the Bahia Blanca-Santa Rosa region arising from the pavement of Route 35 cannot be precisely calculated on the basis of a study in one partido. In livestock production, however, there is no apparent reason why benefits should be greater elsewhere than in Puan and wheat producers in the partido probably fare better than most. Generally, there are few differences between farmers in Puan located twenty or thirty kilometers from Route 35 and similarly situated farmers in La Pampa. In both cases the absence of a "feeder road" system reduces the benefits which could be received by improving the main highways. Furthermore, even the presence of better "feeder roads" would not significantly alter the situation since there are no evidences of "arrested" desires to introduce new products or to change methods, or burdensome problems in marketing production. Without more marketing difficulties and a relatively more important role of transportation, road improvements cannot precipitate large changes. The paving of other sections of the highway have not produced results which indicate otherwise. The three sections in La Pampa nearest the provincial border were paved in 1964 3In George Wilson's study most cases of economic stimulation resulted from sharp decreases in transportation rates. This would definitely not be the case here. 184 and 1965 and there have been no noticeable changes in pro- duction according to the technicians at I.N.T.A. and sta- tistics of the Ministry of Agriculture.4 This does not pre- clude the possibility that changes have obtained or will obtain in the future. If they have occurred, however, they are certainly not substantial and there is no evident reason to expect effects to be stronger in the future. 4Production statistics are not changed in response to small increases in output. They are calculated by tabu- lating results of questionnaires to farmers. Usually, farmers are reluctant to admit production gains so that their answers are multiplied by the "coefficient of lies" mentioned earlier. Again, for example, of 5 per cent could go unre- ported and would not be discovered with the statistical pro- cedures used. When changes in production have occurred they have been related to the quantity of rainfall. A longer period of time than two or three years is needed to distinguish be- tween changes attributable to rainfall and those arising from better roads. CHAPTER VII CONCLUSIONS In Puan and, more generally, the Bahia Blanca-Santa Rosa region it is concluded that highway improvements would not lead to a substantial increase in agricultural pro- duction. According to I.N.T.A. there are opportunities to generate such an increase if the right element is found since there are untapped production possibilities. There is no indication, however, that road improvements can provide this key factor. As Wilson states, "Transport is no more an initiator of growth than any other form of investment or de- liberate policy. Sometimes it can be strategic, but so can any other type of investment."1 In this case another type of investment is needed. It is informative to re-state why road improvements cannot exert a stronger influence and to see the more general conclusions which can be drawn. A road can have a variety of effects on production depending on the production climate and the opportunities which are available or that can be made available. It could be the case that road improvements as opposed to new con- struction, are seldom capable of promoting large economic 1Wilson, Op. cit., p. 218. 185 186 benefits. The successes which road construction projects have achieved and the fact that paved roads are present in developed countries have given rise to the belief that road construction projects will stimulate the economy. It cannot be generalized from profitable new construction that road improvements will have impressive effects. Also, that paved roads are present in more developed countries does not imply that they are a necessary prerequisite for development. In fact, in many cases (including the United States) they have been constructed after other sectors of the economy were well developed. Bahia Blanca-Santa Rosa region.--There are several reasons why road improvements would be expected to have fewer effects in the Bahia Blanca-Santa Rosa region than in other areas. The region is equipped with railroad facili- ties and a system of dirt roads which provide access to both towns and larger marketing centers. The main roads to be im— proved and the railroads run parallel and serve the same towns. Consequently, the improvement of roads can furnish few new transport alternatives. Only if road construction would substantially lower costs, release resources, or broaden alternatives would significant results be expected. Perhaps an "opening—up" situation is necessary to satisfy these requirements. Only in the southern portion of the re- gion does an "opening—up" possibility exist and there the 187 physiographic features set a restrictive upper limit on development. The physiographic characteristics always set the bounds within which road improvements can function. In the Bahia Blanca-Santa Rosa region there are few opportunities to introduce new products so that, at best, the paving of roads could help expand production of present outputs on which roads now set no particular limitations. In the south production could be expanded only with disproportionately higher unit costs. The problems with preparing the land for production, variable climate, and limited soil capacity pre- clude higher gains. Within the physical environment road improvements can exert an influence on agriculture primarily through the producer's actions. If the people react promptly and strong- ly to better conditions a few released resources could re- sult in a re-combination of inputs and a large increase in production. There are now available Opportunities which are not used however, and their realization is not limited by roads. Consequently, better roads cannot be expected to alter the situation since they could be responsible for no particular breakthroughs. Perhaps the sizes of the land holdings or the systems of tenancy limit the reactions. Alternatively, the pace and level of living might be such that the psychic costs of changing them outweigh any pro- spective financial benefits. Whatever, the reason, there is 188 a noticeable inertia in production. Farmers have produced the same products for a number of years and are accustomed to "time-tested" production methods and marketing techniques. Without stronger aspirations to change methods, expectations of effects of highway improvements cannot be high. Even if there existed a conducive physical environ- ment and plans to take advantage of opportunities when they arose, the effects of road improvements on producers could be limited by marketing facilities. Without cooperating factors at the end of a road, its paving cannot produce favorable results. In this region production can always be sold, but the delays and added expenditures make it less profitable than need be. Road improvements must be ac- companied by expanded livestock and grain handling facilities if they are to achieve maximum effectiveness. Investments in roads, as in other fields, must be viewed in relation to the complex of factors in which they operate. Perhaps this is more important in the case of roads since the physical presence of a road does little or nothing if vehicles are not present to utilize it. Furthermore, without "feeder roads" to connect a main highway to internal areas, the highway's effectiveness is impaired. In the Bahia Blanca-Santa Rosa region there has been no problem in expanding the trucking industry to carry the produce where roads exist. However, there has been a deficiency of well- maintained "feeder roads." The responses to questionnaires 189 in Puan reflected the belief that without a system of roads significant effects of paving Route 35 had not previously been felt. Also, effects were not expected to arise from future highway construction projects, if "feeder roads" were not improved as well. A coordination of highway improvements with provincial roads and with other factors is necessary for maximum benefits. In this region, though, even without a conscious coordination of important factors, producers can arrive at the paved roads and can sell what they like, but it is at a slightly higher cost and with less convenience. The Bahia Blanca-Santa Rosa region is not representa— tive of a situation typically associated with agricultural economies. There are not overbearing problems with capital invested outside the agricultural sector, impossible obstacles to overcome in production or marketing, or an appreciable absence of COOperating factors. Limitations on production arise, to an extent, from all of the above factors. NOne, however, appears to be so strong as the psychic costs which outweigh the benefits from the adoption of modern techniques. It is not likely that road improvements will assist the solu- tion of this latter problem. Although there are limits to the benefits to be re- cevied, road improvements will provide some savings. Theo— retically, the producers should be the recipients of gains from reductions in vehicle operations and maintenance expendi- tures and in transportation costs after they are passed on by 190 trucking enterprises and "middlemen." The truck tariff structure and marketing methods do not ensure that the theo- retical expectations will materialize. The prospects of rate reductions following road improvements are not favor- able, since the wheat truckers officially operate on the basis of rates set in the provincial capital and the cattle truckers on the basis of what the trucking enterprises de- cide. Cost savings need not be passed on to the producers with this system. Theoretical considerations.——The physical and insti- tutional factors in the area strongly distort the theoretical expectations elaborated in Chapter I. Briefly, it was ex- pected that the increase in the supply of road transportation would lower its price and cause a greater application of all inputs used in producing the marketed output. The output would increase for all of the firms (farmers) and, conse- quently, the industry and lead to a lower industry price. The lower price, in turn, would be reflected in lower output by at least some of the firms and a smaller industry output than after the original expansion. It has been emphasized that the increase in the use of the transport input is not so great as would be the case in other areas. There are fewer transport problems and road improvements do not necessarily solve those that exist. Once the supply of the transport input is increased, the 191 fall in its price would be less than expected. The fixed rates for carrying both wheat and cattle by truck prevent vehicle maintenance and operation costs from being passed on to the producers. Some savings would accrue to the farmers in terms of saved time and conveniences and in lower trans- port costs to the extent that truck drivers "unofficially" competed for business. They would be small, however, and no large increases in the utilization of other inputs could be anticipated. Since there are relatively fixed proportions in input use, it would not be expected that any input would be increased markedly more than others. The combined effect of a small decrease in operating costs for the trucking enterprises and the probability that only a small percentage of this decrease would be passed on limits the capacity to re-combine inputs and increase production. Besides, the pro- ducers, in general, demonstrate a small propensity to do so. The consequent increase in output for the industry must be small. The price support policy for wheat guarantees that increased output will not precipitate a price decline below an established level. The same is not true for cattle and increased output could lead to a lower industry price and a consequent reduction in the output of some firms. A large change in any direction is not likely since the magnitudes dealt with are not sufficiently important to alter present production levels. 192 Because of the limitations on the benefits to which agricultural producers are subject after a government invest- ment in road improvements, a goal of increasing agricultural production a substantial amount is not likely to be reached. The alternatives for the government are either to remove the institutional obstacles, to justify the road improvements in another manner, or to attempt to increase agricultural pro- duction by other means. In the Bahia Blanca—Santa Rosa re- gion it is doubtful that production can be increased by road improvements even if institutional factors, e.g., fixed truck tariffs, are altered. The savings accruing to farmers would not be great enough. If the road project cannot be justified as an investment, it perhaps can be rationalized by its merits as a consumption good. Surely, greater conveniences and other social benefits would result. It is doubtful, though, that the economy can afford such large expenditures on con- sumption goods. If the goal of increasing agricultural production is focused on, better means of reaching it are apparent. If an investment in highways is necessary, more maintenance ma— chines and operators could very likely have a greater impact. With a consistently efficient maintenance policy, the pro- blems with unpaved roads could be minimized and practically eliminated. The most conspicuous investment for increasing production, outside of the transport sector, is an increase in I.N.T.A. agents to disseminate and encourage the use of 193 modern techniques. In terms of alternatives, one kilometer of paved road is equal to approximately four extension agents for three years or that of a maintenance machine and an operator for five years. Both extension agents and mainten- ance machines could apparently have a greater influence than paved highways in this region. The small positive effects suggest that prospective road improvements should be examined closely and that post- construction evaluations would be helpful. Perhaps more post—paving evaluations would lead to more pre-paving studies by elaborating variables or showing unanticipated results or unjustified expectations. Methodology.--The approach used here does not permit a decision on whether the construction should take place since the economic and social benefits and costs arising out- side of the agricultural sector are not considered. In many regions of less developed countries, however, the agricultur- a1 sector product approximates the economic product so that if road improvements do not lead to better conditions in the agrarian sector, they must be abandoned or justified in a more nebulous manner as social or consumption goods. If the economy cannot support expenditures on consumption goods, 8 more appropriate allocation of funds can be chosen. When the emphasis is on the highway rather than the goal, other pertinent investments are often ignored. If an increase in 194 agricultural production is the desired goal and highway im- provements are viewed as one of the ways to achieve it, other possibilities are not obscured. When road evaluations are made on a regional basis with particular goals in mind, perhaps the impression that roads are panaceas for many eco- nomic problems would be dispelled and realistic alternatives made evident. The common methods do not emphasize the distinction between consumption and investment factors or the regional examination of a road in the context of the transport and re— lated sectors of the economy. The motivations for making the project evaluation is one of the reasons why these steps have not been taken. When an engineering enterprise that de- sires to construct a highway or a representative of a country with hopes of gaining financial aid evaluates a prospective project their plans often are to include as many benefits as possible and to present the proposal in an attractive manner. The result has been a one-sided evaluation of benefits and costs, the stressing of less important factors and, surely, some unwise investments. This study suggests, in the case of Route 35, that results would be less impressive than was anticipated before the construction. With the micro approach and concern for the sectors within which the road improve- ments operate, there is less chance of mistaking future bene- fits and a better possibility of demonstrating the sources from which changes will arise. 195 It is difficult to postulate the conclusions which the common methods would reach in the case of Route 35 because of their many levels of sophistication. An engineering method probably would not consider the project profitable if it weighed cost reductions to road users against construction and maintenance expenses since changes in costs would not be large. With this approach, the evaluation could justify the project only if it were felt that suggested, though unquanti- fied, social or economic benefits would be great and this is not probable. If the engineers assume that the road will be improved and merely work with technical relationships (as happened with Route 35), the construction is possible, but if there were alternative highways, it would be much less likely. A person working with both engineering and macro- economic methods can justify any project if enough benefits are considered. For example, if benefits were taken to the extreme of education from a new school or a new variety of wheat discovered after a highway improvement was concluded, almost any project could be found to be profitable. Depend- ing on the evaluation and its purposes, the improvement of Route 35 could be accepted or rejected, but there is the possibility of rejection in this zone, whereas in other areas the acceptance with a usual cost-benefit method can be al- most certain. 196 While no new approach for evaluating a highway pro— ject has been presented here, ideas for changes in common methodologies are implicit. By concentrating on the princi- pal sector in the economy which a road improvement could benefit and demonstrating that results would be insignifi— cant, it is suggested that methods which sanction such pro— jects are obscuring the issue. The engineering method which slights economic factors and the expanded approach which lumps all benefits together while ignoring costs on a parallel level can lead to a misunderstanding of a highway's effect on the economy. Especially in less developed countries it is important to have more economic considerations in project analyses than are present in engineering studies. It is al- so essential that attention be given to investment priori- ties. If a "benefit is a benefit" as in many studies, the question of whether an increase in the supply of transpor— tation will have a direct or long lasting influence, or the most vital influence, on the economy is blurred. It would be valuable to incorporate a regional study of the principal sector or sectors in the current approaches so that crucial economic factors can be accentuated. APPENDIX I QUESTIONNAIRE FOR AGRICULTURAL COOPERATIVES AND "MARKETING ORGANIZATIONS" Description a. Name of organization b. Town c. Composition of clients d. Zone of influence e. Products - quantity and percentage of business in the zone Marketing process a. From whom do you receive products? b. To whom are products sent? 1. Percentage by truck 2. Percentage by railroad Transportation a. What are the advantages and problems with railroads and trucks? b. What are your plans for the future with the now higher railroad tariff? What will you do if rail- road service is improved? 197 198 What effect would road improvements have on your business? On costs? On sales? What would you do differently if the section of Route 35 between San German and Meridiano V were paved? What did you do after the paving of the section be- tween San German and Nueva Roma? Do you have problems with rainfall on dirt roads? 1. How many millimeters cause traffic to be stopped? 2. How many days per year are the roads impassable? What are the effects of dirt roads on costs, time, and the amount loaded? Does Route 35 have important effects on other areas, e.g., Santa Rosa, Cordoba, Mendoza? Description of the farm. a. b. APPENDIX II AGRICULTURAL QUESTIONNAIRE FOR PRODUCERS IN THE PARTIDO PUAN Division of the partido. Number of hectares. Land tenancy. Distance from Distance from Distance from Natural problems. 3. (Corresponding to Map 6.) a paved highway. a railroad station. Bahia Blanca. Do natural factors impose large limitations on production? Is the wind a problem? Are there problems with weeds? Are there problems with carnivorous animals or parasites? What is the relationship between rainfall and production? Do you attempt to improve the soils with: 1. 2. 3. fertilizers? crop rotation? barbecho? 199 200 9. Do you usually use varieties of new plants or new seeds? h. Do you experiment with seeds? i. Do you work with I.N.T.A.? 3. Products. a. What types of crops do you cultivate? What percentage of the total is each type? b. What types of livestock do you raise? How many ani- mals per hectare? c. Why do you have this mixture of products? For how long have you had it? d. Do you begin each year with production plans? Based on what? 4. Sales process. a. In general terms, how and where do you sell your pro- ducts? Are there problems in doing so? b. To whom do you sell your crops? In what proportion? 1. National Grain Board? 2. Cooperatives? 3. Casas de Comercio? (private businesses) 4. Other? c. To whom do you sell your cattle? 5. Transportation.q a. What means of transportation do you use for crops and cattle? k. 1. 201 Railways or highways are used more? What are the benefits of each? Could you sell more of what you produce with all- weather roads? Could you produce more with all-weather roads? (more of the same products or introduce new ones). Which products? How? Could you reduce your transportation costs with all- weather roads? WOuld you change your methods if more roads were improved? WOuld there be more changes in more time? What would you do differently if the 44 kilometers of Route 35 between San German and La Pampa were paved? What did you do differently after the section of Route 35 between San German and Nueva Roma was paved? Which routes do you use most now? Do you have problems with rainfall? With how many millimeters? What would you do if the railroads were improved? Do you have problems with the port? Government policy. a. b. C. .Is the National Grain Board important for you? What role does I.N.T.A. play? Is the export and import policy important? 202 d. How difficult is it to obtain credit? e. Are the taxes on land a problem? f. 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