Agriculture and Rural Development
The majority of developing country
population lives in rural areas (64% as opposed to 26% for developed countries)
The majority of the developing
countries labor force is engaged in agriculture (58% as opposed to 5% in developed).
Agriculture tends to account for a
larger share of employment than of GDP.
GDP share from agriculture about 12%
on average for developing (about 2% for developed in contrast).
This would suggest that a focus on
rural areas and agriculture should be part of a development strategy designed
to address poverty.
Historical views: (from Staatz and Eicher)
Passive role to agriculture during
the 1950’s (the early phase of thinking about development).
Development was seen as structural
transformation of the economy, leading to a decline in agriculture’s share of
GNP and the share of the labor force employed in agriculture.
Working from the observed fact that
as income grows, the share of agriculture in the economy declines.
An example is the Lewis model (1954)
that we considered earlier in the course.
The rural areas are a source of
labor and food for the urban sector. Focus is on drawing “surplus labor” from
rural areas.
A different source of the view that
the focus of development should not be on agriculture is due to Prebisch and
Singer which we also talked about earlier in the course.
They pointed out that there is a
tendency for the commodity terms of trade to turn against countries that export
primary products and import manufactures.
This limits the prospects of growth through primary product export.
Commodity terms of trade: price ratio.
Price index of exports divided by price index of imports.
Why?
1)
Engel’s law – income elasticity of
demand is lower for primary commodities than for manufactured goods.
2)
Substitution of synthetic for
natural resources (jute, sisal for example).
[also nature of technology change in industry versus
agriculture, and supply side issues of many primary product developing
countries can be cited]
Hirschman (58) focused on linkages
and integration. Recall our discussion
of forward and backward linkages. The
argument was that industry has more backward and forward linkage potential than
agriculture. Thus emphasize industry to
get multiple effects.
To the extent that there was
investment in the agricultural sector, it was based on diffusion of developed
country practices to developing country farmers.
A package was extended, with the
idea that adoption would lead to rural transformation (and non-revolutionary
transformation at that).
It was also assumed that developing
country farmers were inefficient, and could adopt efficient practices developed
in the advanced countries.
By the mid 1960’s, there began to be
a view that the ag sector was more than a passive force in development, and
could play a role.
Two main themes came out of actually
working in rural areas, rather than basing theoretical models on developed
country history.
1)
Structural impediments (social and
political) limited the ability of rural producers to adopt extended
technologies. Marxist critiques played a
role here.
2)
Rural farmers were responsive to
useful things, not tradition bound lumps.
If they did not adopt something, maybe they had a reason.
Schultz described rural farmers as
efficient but poor (64).
He suggested there was not output
growth waiting to happen by a reallocation of existing resources.
People who lived in these
environments had worked out over time reasons for allocating resources the way
they did. New agricultural technologies
would be needed.
So new research institutes were
developed. The collaborative group for
international agricultural research.
The link here to land grants and
CGIAR’s. Funding from countries, UNDP,
FAO, WB, ADB, Ford Foundation,…
http://www.cgiar.org/who/wwa_history.html
CIAT - Centro Internacional de
Agricultura Tropical
CIFOR - Center for International
Forestry Research
CIMMYT - Centro Internacional de
Mejoramiento de Maiz y Trigo
CIP - Centro Internacional de la Papa
ICARDA - International Center for
Agricultural Research in the Dry Areas
ICRISAT - International Crops Research
Institute for the Semi-Arid Tropics
IFPRI - International Food Policy
Research Institute
IITA - International Institute of
Tropical Agriculture
ILRI - International Livestock
Research Institute
IPGRI - International Plant Genetic
Resources Institute
IRRI - International Rice Research
Institute
ISNAR - International Service for
National Agricultural Research
IWMI - International Water Management
Institute
WARDA - West Africa Rice Development
Association
World Agroforestry
Centre (ICRAF)
WorldFish Center
These began in the 1970’s.
Why?
1)
Response to Marxist critique such as
the underdevelopment theories.
2)
Response to observing the empirical
fact of political disasters (rapid growth in
3)
Realization that the poor were not
benefiting in many cases.
4)
Realization that urban sector could
not keep up with labor force growth.
These institutes generated a great
deal of empirical research on the nature of agricultural growth and technology
adoption, rural labor market functioning and the relationship to migration,
agricultural – rural economy linkages, market chains, farming systems research.
Piles and piles of microlevel
research.
Also many worked to build up host
country / national research capacity (NARS in dev speak).
Integrated Rural Development.
1)
Increase output growth of small
farmers (technology, prices, institutions)
2)
Increase demand for domestic
production by urban consumers (healthy urban sector and strong linkages)
3)
Increase diversified base of rural
economy that are complements to the agricultural economy.
Basic Needs. Growth with equity. Focus on women. Focus on poverty. Explicit attention on health and
nutrition. All these lead to a broader
view of the agricultural sector.
The 80’s began a swing back to macro
perspectives. Concerns about how far it
was possible to go addressing basic needs without also growth.
Move government out of
marketing.
Exchange rate issues were discussed
– overvalued currencies were a disincentive for farmers.
“Getting prices right”.
General issues of structural
adjustment policies.
Where are we now? Moving toward microeconomic and macroeconomic
integration. “Are macroeconomic reforms
microeconomically coherent?”
For example, households may be both
producers and consumers of a commodity such as rice (think of seasonal
issues). What is net effect of letting
the price fluctuate? Also, the static
nature of the macro models are being challenged by greater understanding of the
role of risk and vulnerability.
Move to the Todaro chapter, to get a
different perspective on agriculture.
A few other facts Todaro notes about
the agriculture sector in developing countries.
Per Capita food production is for
the most part increasing, but not at a very high rate. 1% per year or so.
However, in some areas (SSA,
Also, compare to GNP growth rates to
ag sector growth rates. Agricultural
sector growth rates tend to be below overall GNP growth rates.
What are the structural
characteristics of agricultural production we need to know about?
First, we need to be aware that
“dual economy” issues may be relevant here.
There is commercial, mechanized, low
labor high capital input, high productivity farming.
There is subsistence, high labor low
capital input, low productivity farming.
A productivity gap. The cash value of output per farmer. Two ‘types’ of agriculture can exist side by side
in developing countries, one a developing country ‘type’ and the other a
developed country ‘type’.
Developed country output in terms of
labor productivity was 13 times greater than developing country output in 1960,
50 times greater in 2000.
Land productivity. Kilograms of output per hectare from World
Resources Institute “earthtrends”
http://earthtrends.wri.org/index.php
From an FAO study on agricultural
productivity “Agricultural Investment and Productivity in Developing
Countries” (Zepeda, 2001)Selected
Indicators of Agricultural Productivity
|
Indicator |
Sub-Saharan |
World |
|
Fertilizer use (kg/arable ha,
1980) |
16 |
86 |
|
Fertilizer use (kg/arable ha,
1995) |
13 |
94 |
|
Tractors (per 1 000 ha cropland,
1993) |
3 |
21 |
|
Ag output growth (percent/yr,
1980-1990) |
1.8 |
2.8 |
|
Ag output growth (percent/yr,
1990-1996) |
2.1 |
1.7 |
|
Cereal yield (kg/ha, 1980) |
1 100 |
2 230 |
|
Cereal yield (kg/ha, 1995) |
1 041 |
2 561 |
|
Ag productivity (US$/ha, 1993) |
68 |
236 |
Developed country agriculture output
per hectare is 2-5 times greater than the output for the same amount of land in
developing country agriculture.
We can identify three main types of
agrarian systems throughout the developing world.
1)
Agricultural dualism
(latifundio-minifundio). Frequently
observed in Latin America, but also exists in other areas. Colonial history. A few landowners hold a vast majority of the
land. High Gini coefficients for land
distribution (in the 0.8 to 0.9 range).
Roughly 90% of the farms occupy less than 17% of the land. (see pages 431-3)
a.
Does this reflect economies of scale
/ capital intensive production has high land requirements? Inverse relation between farm size and
productivity. Smaller farms are lower
cost producers of a given quantity of output.
Smaller farms produce more per unit of land. Land is used less efficiently in the large
farms and labor is applied intensively in small farms. Land tenure reform, land redistribution,
training, and access to credit can be a way of increasing national output and
addressing poverty of the small farmers.
2)
Absentee landlord / tenant farming /
sharecropping systems. Frequently
observed in Asia. Village distribution
of land through central village authority was transformed during colonial era
to landlord – tenant system. Absentee
owners of land (which is a bit different from the patron living on the land in
the latifundio system). Around 85% of
tenanted land is sharecropped in Asia, and the majority of the land in many
Asian countries is tenanted land. Role
of the moneylender (or food / input lender) in concentrating tenure in a few
hands.
a.
Note economic efficiency argument
that resources will end up in the hands of the most productive user. Is this the case here? Again, land tenure reform, land
redistribution, training, and access to credit can be a way of increasing
national output and addressing poverty of the small farmers.
3)
Land abundant, extensive
cultivation. Frequently observed in
Africa. Some land is unused since
constraint is labor and low technological inputs. Planting by hand, using an ax or knife. Traction limited by tsetse fly. Intense cultivation of one field gives way to
intensive cultivation of another – shifting cultivation. Limits need for fertilizer. Labor constraints are seasonal, but seasonal
constraints limit output. Rainy seasons
one or two times per year, weeding / planting / harvesting all falls within a
certain window. Leads to seasonal
underemployment.
a.
This system is coming under pressure as
population grows and formal economy and state presence grows. Here, you need technological improvements
that allow more intense cultivation of given land, release labor constraint (without
requiring high capital inputs and displacing workers).
Land Reform:
Why would we think land reform to
provide formal tenure is a good thing?
1)
Incentive to invest.
2)
Investment horizon extended.
3)
Credit access and collateral.
When might it not work out as anticipated?
1)Weak states lead land allocation
to follow political rather than efficiency arguments in distribution:
Platteau. (Dev and Change,
1996) Land tenure registration can in
fact be risk increasing for rural farmers in a context where traditional rights
exist and are understood, but a competing formal system is designed in a system
where political power influences who gets deeds.
2)
Land reform takes place in contexts where there is ambiguity over
rights, leading to conflict.
In
3)Ambiguity in land rights is a risk
mitigating mechanism.
Pastoral land examples.
What other options for improving
agriculture are available?
How can we improve small scale
agriculture?
1)
Technology and innovation.
Technology tends to be labor saving, which is not always the
best idea.
Technology also can require capital investment, which can be
a problem.
Challenge to design low capital cost, non labor replacing,
scale neutral technologies.
Agroforestry, intercropping. Seed
storage.
Challenges 1:
The social context of production.
Tasks in agriculture are often
“gendered”. Women transplant rice, men
clear fields, women harvest rice,…
Crops grown can also be
“gendered”. Women grow rice, men grow
peanuts.
Particular issues arise when women
grow subsistence crops and men grow cash crops.
How will inputs be purchased (issues of cash from husband and access to
formal credit arise)? What crops will
extension services target (extension agents are usually staffed by males)? What happens when a subsistence crop moves
into the cash crop domain?
In
Milk marketing example from northern
Senegal Peace Corps rice program.
IRRI had developed IR-8, a green
revolution crop. A rice breeder had
crossed it with local varieties. It has
performed extremely well in on research station trials. But there was little interest in extension
from the national ag extension agency.
Rice is grown by women in the area.
Rice is not a cash crop.
Baseline studies to establish
growing practices and varieties in the area.
“Loan” of 2 kilograms of rice
seed. Loan is to be returned at the end
of the season. We monitor the plot, and
a traditional rice plot next to the trial plot.
A few techniques go with it:
Tilling depth, manure, and plant
density in seedbed.
Transplant period of 21 days.
Transplant density.
Overall first year yield improvement
of 13% for transplanted rice and 21% for direct seeded rice. In adoption literature, you need to get 20%
to 30% to have some confidence of widespread adoption. For people who followed all the
recommendations, the results were better suggesting things would catch on. They were, at least during the 1992 season
when I left.
APEX project in
Challenges 2:
Risk
Risk minimization. The consequences of failure are severe. Farmers may stick with tried and true low
mean low variance techniques and crops, even when extension programs are
demonstrating new techniques that appear to offer higher returns.
Also, can explain sharecropping as a
response to risk. I accept a lower share
of the annual return even though I did all the work in return for which the
landlord guarantees me food in the crisis.
Exploit me now, insure me later.
Resistance to proposals may not be a
manifestation of traditional stubbornness, but a response to the farmer’s
assessment of the risk or a lack of understanding of the larger context of
production by the extension agent.
2)
Institutional and Pricing
reform.
Prices fixed by state boards, often
to keep food prices low in the city. Reduce
role of marketing boards (but who will fill the gap?)
Policies that allow price systems to
create market incentives can work (but how to do so without exacerbating
risk?).
Policies that provide access to
credit, inputs, and information can help.
Policies need to recognize that the
agricultural sector is but one component of the overall rural economy. As we have noted before, there is a great
deal of income diversification even in rural areas. We must be aware of how efforts to improve
agriculture impact these other activities, and how we can increase agricultural
output by increasing these activities.
We also should be aware that
priorities of people in rural agricultural areas may not be on agricultural
development.
Integrated rural development –
agriculture as a foundation of the rural economy, but linked with alternative
income generating activities, improved access to public goods and social
services.
Policy Summary:
Land Reform
· Inverse Farm Size – Productivity
· Incentive to invest / not degrade
· Collateral
· Equality enhancing.
· Problems with weak states, not market allocation
· Problems with non-compensation
· Problems with ambiguity of ownership and traditional land
tenure system
§ Risk minimizing ambiguity
· Problems when not a component of broader program
Technology and Innovation
· Low capital cost, fit in labor profile, scale neutral
(agroforestry, IPM, ...)
· Non risk enhancing
/ mean variance issues
· Fits existing age / gender patterns or is at least aware of
them
· Problems when not part of a broader program
Institutional Change
· Market institutions to increase volume and efficiency
· Privatization without loss of complementary services
· Appropriate credit
· Risk minimizing, security enhancing
· Information enhancing
Broader Rural Development
· Overall quality of lives improved
· May not be about agriculture