On Rural Income

Rural lands are known for their contribution to the national income through agricultural production. Acres and acres of land are allocated for the sole purpose of feeding the population that lives in cities. What if the allocation of resources is disrupted in a way that spoils the welfare of the people living in these rural areas? What if they find that growing wheat, grains, or vegetables no longer sounds profitable? In that case, the villagers or their offspring would flee their homes, looking for new prospects outside their world. Discouraged, they would stop producing food, causing prices of the food to plummet at the country level.

Such a scenario has been coming true in many parts of the world. Masses of villagers move to cities at a greater pace than ever. They find it difficult to raise their family merely by harvesting crops. Family ranches with less than an acre of land barely make ends meet, as it is costlier to practice farming on a small scale. Big farmers with hundreds of acres of land can minimize their costs by making use of economies of scale.

Governments must act in such cases by coming up with policies that can encourage these small farmers to continue producing. Subsidies are one of these policies since they have the potential to raise their income to levels that enable them to keep going.

Small farmers can also form what is called "co-operative farming", getting together with neighboring farmers to produce on a larger scale. Such a practice has cost-saving features that help farmers cope with the ever-rising costs of agricultural production.