Uncertainty in a Model of Small Agriculture in Peru: Some Preliminary Results

There seems to be a growing appreciation that small agriculture is composed of economic units, or, as we also prefer to say in lack of a better terminology, of economic organizations which defy to be subsumed under the heading of conventional microeconomic models, private households or enterprises. Thus, in a voluminous book edited by Hoff .et al (1993) the characteristics of these organizations are treated from a theoretical and empirical point of view, apparently exhaustively. On the other hand, there are even textbooks filling this apparent gap in the economic literature (for example, Ellis 1988). However, if one settles down to study the behaviour of this sector of the economy in a certain empirical context, one is overwhelmed by the inability of the literature to explain fully the observed behaviour of the observed facts. To my taste, the first of the mentioned volumes treats too many, and the second one not enough aspects proper to small agriculture. If this is state of the art in the respective field of economics, it has the practical consequence that the economist can give little meaningful advice on what economic policy measures should be undertaken towards this sector of the economy. These could be measures to incorporate this sector further into the existing economic structure, or at least to avoid its further separation from it. The impact of these policy measures could in the extreme be world-wide, since it is small agriculture which in Peru produces the raw material for one of the most important drugs in illegal international drug traffic, cocaine.